Debt is an obligation that requires one party, the debtor, to pay money borrowed or otherwise withheld from another party, the creditor. Debt may be owed by sovereign state or country, local government, company, or an individual. Commercial debt is generally subject to contractual terms regarding the amount and timing of repayments of principal and interest. Loans, bonds, notes, and mortgages are all types of debt. In financial accounting, debt is a type of financial transaction, as distinct from equity.
S&P Global Ratings is an American credit rating agency (CRA) and a division of S&P Global that publishes financial research and analysis on stocks, bonds, and commodities. S&P is considered the largest of the Big Three credit-rating agencies, which also include Moody's Investors Service and Fitch Ratings. Its head office is located on 55 Water Street in Lower Manhattan, New York City.
A credit rating agency is a company that assigns credit ratings, which rate a debtor's ability to pay back debt by making timely principal and interest payments and the likelihood of default. An agency may rate the creditworthiness of issuers of debt obligations, of debt instruments, and in some cases, of the servicers of the underlying debt, but not of individual consumers.
Moody's Corporation, often referred to as Moody's, is an American business and financial services company. It is the holding company for Moody's Ratings, an American credit rating agency, and Moody's, an American provider of financial analysis software and services.
A credit rating is an evaluation of the credit risk of a prospective debtor, predicting their ability to pay back the debt, and an implicit forecast of the likelihood of the debtor defaulting. The credit rating represents an evaluation from a credit rating agency of the qualitative and quantitative information for the prospective debtor, including information provided by the prospective debtor and other non-public information obtained by the credit rating agency's analysts.
Fitch Ratings Inc. is an American credit rating agency and is one of the "Big Three credit rating agencies", the other two being Moody's and Standard & Poor's. It is one of the three nationally recognized statistical rating organizations (NRSRO) designated by the U.S. Securities and Exchange Commission in 1975.
Moody's Ratings, previously known as Moody's Investors Service, often referred to as Moody's, is the bond credit rating business of Moody's Corporation, representing the company's traditional line of business and its historical name. Moody's Ratings provides international financial research on bonds issued by commercial and government entities. Moody's, along with Standard & Poor's and Fitch Group, is considered one of the Big Three credit rating agencies. It is also included in the Fortune 500 list of 2021.
Sovereign credit is the credit of a sovereign country backed by the financial resources of that state. Sovereign credit is the opposite of sovereign debt. Fiat money is sovereign credit and sovereign bonds are sovereign debts. When money buys bonds, sovereign credit cancels sovereign debt.
In investment, the bond credit rating represents the credit worthiness of corporate or government bonds. It is not the same as an individual's credit score. The ratings are published by credit rating agencies and used by investment professionals to assess the likelihood the debt will be repaid.
Probability of default (PD) is a financial term describing the likelihood of a default over a particular time horizon. It provides an estimate of the likelihood that a borrower will be unable to meet its debt obligations.
Euromoney is an English-language monthly magazine focused on business and finance. First published in 1969, it is the flagship production of Euromoney Institutional Investor plc.
A market-implied rating estimates the market observed default probability of an individual, corporation, or even a country. Indeed, a credit rating is simply a probability of default. The methodology used by Moodys consists in a median piecewise fit of the ratings to the credit defaut swap data observed on the market. S&P however uses a log regression between the log cds and the ratings equivalent number, adjusted to firm specifics, continent, and outlook.
A Credit Derivatives Product Company (CDPC) is a business focused on trading in credit default swaps contracts. CDPC typically sells insurance against someone failing to pay back a loan ('defaulting'). A CDPC is usually highly leveraged, meaning that if even a portion of its held credit default portfolio were to be 'triggered' at once, the CDPC would not have the capital to fully pay out the resulting insurance claims.
Moody's, previously known as Moody's Analytics, is a subsidiary of Moody's Corporation established in 2007 to focus on non-rating activities, separate from Moody's Investors Service. It provides economic research regarding risk, performance and financial modeling, as well as consulting, training and software services. Moody's is composed of divisions such as Moody's KMV, Moody's Economy.com, Moody's Wall Street Analytics, the Institute of Risk Standards and Qualifications, and Canadian Securities Institute Global Education Inc.
The Big Three credit rating agencies are S&P Global Ratings (S&P), Moody's, and Fitch Group. S&P and Moody's are based in the US, while Fitch is dual-headquartered in New York City and London, and is controlled by Hearst. As of 2013 they hold a collective global market share of "roughly 95 percent" with Moody's and Standard & Poor's having approximately 40% each, and Fitch around 15%.
Several credit rating agencies around the world have downgraded their credit ratings of the U.S. federal government, including Standard & Poor's (S&P) which reduced the country's rating from AAA (outstanding) to AA+ (excellent) on August 5, 2011.
ICRA Limited (ICRA) is an Indian independent and professional investment information and credit rating agency. The company was established in 1991, and was originally named Investment Information and Credit Rating Agency of India Limited.
China Chengxin Credit Rating Group was founded in Beijing on 8 October 1992 through the incorporation of China Chengxin Credit Management Co Ltd, which is the first nationwide credit rating company of China. Subsequently, it formed subsidiaries and established branches across China, including China Chengxin International Credit Rating Company Limited. The share-holder structure of the joint venture company was changed in 2006 when Moody's came in to take over the equity positions of Fitch and the supranational institution. The company is one of the few major credit rating agencies currently operating in China.
Demotech, Inc., is an American insurance rating agency headquartered in Columbus, Ohio, that focuses on independent, regional, and specialty companies in the property and casualty insurance (P&C) industry. It is independent from the companies that it rates.
