Standard & Poor’s (S&P)

Standard & Poor’s (S&P) is one of the big three credit rating agencies (Fitch Ratings and Moody’s being the other two) which combined control 90-95% of the market. It has approximately 10,000 employees worldwide and had 2009 revenues of 2.61billion. It provides both short term and long term corporate credit ratings which measure debt instruments (most notably bonds), these measurements aim to determine the likelihood that a company will be able to meet it’s financial (debt) obligations.

 Standard And Poors Ratings

Standard And Poors Long-term credit ratings

Stand & Poors rates borrowers on a scale between AAA (most secure and likely to meet their debt obligations) to D (least likely), they also use + and – signs to indicate intermediate ratings which helps to differentiate between the top (+) and the bottom (-) of a specific rating.

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	Has a strong capacity to meet it’s debt obligations, the difference between AAA and AA is small.
Investment Grade	A	These companies have a strong capacity to meet their debt obligations, although if the economic conditions worsen they may struggle.
Investment Grade	BBB	Has an adequate capacity to meet it’s debt obligations, worsening economic conditions could hampen this ability.
Non-Investment Grade	BB	Prone to big movements in the economy, otherwise generally OK.
Non-Investment Grade	B	Financial situation is prone to big movements
Non-Investment Grade	CCC	Currently vulnerably, needs positive economic and business conditions to meet it’s debt obligations.
Non-Investment Grade	CC	Highly vulnerable, extremely speculative
Non-Investment Grade	C	Highly vulnerable, possibly in bankruptcy or voluntary administration but still continuing to meet it’s debt obligations.
Non-Investment Grade	CI	Past due on interest
Special	R	Under regulatory supervision due to its financial situation
Special	SD	Selectively defaulted on it’s debt obligations
Special	D	Has defaulted on it’s obligations and S&P believes it will default on most if not all other obligations.
Special	NR	Not Rated

Sometimes a credit watch is issued, this indicates whether a company is likely to be upgraded, downgraded or stay neutral.

Standard And Poors Short-term issue credit ratings

Rating	What This Means
A-1	Has a strong ability to meet it’s financial obligations
A-2	Susceptible to adverse economic conditions, although it’s capacity to meet it’s financial obligations is still satisfactory
A-3	Adverse economic conditions will weaken it’s ability to meet it’s financial obligations
B	Currently has the capacity to meet it’s financial commitments but faces major ongoing uncertainty that could hampen this ability.
C	Vulnerable for to nonpayment, reliant on positive economic, business and financial conditions to be able to meet it’s financial obligations.
D	Is in default, obligations not met and grace period may have expired. Also used when a company has filed for bankruptcy

S&P Stock market indices

S&P has a number of different stock market indices across the globe, the most widely known is the S&P500 – which is a weighted index of  500 large cap stocks commonly traded in the United States.