The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:
Rating agencies provide a credit rating for the issuers of debt securities for public or private use.
Issuers whether they be corporate, sovereign, financial or other entities may themselves be rated. This rating may also be the rating of any debt securities which they issue and are directly responsible for, and which are not subject to any credit enhancements.
An issuer’s debt securities may be rated separately from the issuer where the issuer is a company specially set up for the issuance (a special purpose vehicle (SPV) or where the debt securities benefit from credit enhancements (eg a guarantee) to make them stronger than the standing rating of their issuer.
A credit rating is obtained on application of the issuer to one or more rating agencies.
The international credit ratings’ market is dominated by three major institutions:
Standard & Poor's Ratings Services Inc, known as Standard & Poor’s or S&P (S&P)
Moody's Investors Service Inc, known as Moody’s (Moody's), and
Fitch Ratings Inc, known as Fitch (Fitch)
Each has its own rating system and methodology.
A credit rating is a shorthand method of assessing the creditworthiness of a debtor and/or its debt securities. It effectively removes from investors and other parties transacting with a rated entity the need to perform complex
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