Moody’s

Moodys is a credit rating agency that holds a 40% market share, fellow competitor Standard & Poor’s also have a 40% share.  While Fitch Ratings, Dun And Bradstreet (D&B) and A.M Best commanding the other 20% of the market. These agencies aim to measure the likelihood that a company can meet it’s debt obligations (usually bonds or other financial instruments).

 

 

Moodys Ratings

Moodys Long-term obligation ratings scale

Grade	Letter Rating	What This Means
Investment Grade	Aaa	Corporations or companies with a triple A rating are of the highest quality, they have a strong capacity to meet all of their debt obligations.
Investment Grade	Aa (Aa1, Aa2, Aa3)	Has a strong capacity to meet it’s debt obligations, the difference between AAA and AA is small.
Investment Grade	A (A1, A2, A3)	These companies have a strong capacity to meet their debt obligations, although if the economic conditions worsen they may struggle.
Investment Grade	Baa (Baa1, Baa2, Baa3)	Moderate credit risk, these are considered medium grade bonds. Protective elements may be missing or unreliable.
Non-Investment Grade	Ba (Ba1, Ba2, Ba3)	Prone to big movements in the economy, otherwise generally OK. Seen as having questionable credit quality
Non-Investment Grade	B1, B2, B3	High risk of being unable to meet their debt obligations. Generally poor credit quality.
Non-Investment Grade	Caa (Caa1, Caa2, Caa3)	Very high risk of being unable to meet their debt obligations, often already defaulting on some of their debt obligations.
Non-Investment Grade	Ca	Highly speculative, usually already in default.
Non-Investment Grade	C	Typically already in default, lowest grade of bonds. Very little probability of meeting it’s debt obligations.
Special	WR	Withdrawn Rating
Special	NR	Not Rated Publicly
Special	P	Provisional Rating

Moodys Short-term taxable ratings scale

Letter Rating	What This Means
P-1	The issuers of these debt instruments have superior ability to pay back their financial obligations in the short term
P-2	The issuers of these debt instruments have a strong ability to pay back their financial obligations in the short term
P-3	The issuers of these debt instruments have acceptable ability to pay back their financial obligations in the short term
NP	Stands for “Not Prime”, these issuers do not fall in any of the above categories.

Moodys Short-term tax-exempt ratings

These ratings largely overlap with Moody’s short term taxable ratings.

Moodys Individual bank ratings scale

Moody also rates individual banks, these banks are assigned a letter between A and E. Below is a table of each letter and what these letters represent.

Letter Rating	What This Means
A	Superior intrinsic financial strength
B	Strong intrinsic financial strength
C	Adequate intrinsic financial strength
D	Modest intrinsic financial strength, potentially requiring some outside support at times
E	Very modest intrinsic financial strength, with a higher likelihood of periodic outside support