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Standard & Poor's (S&P)
Practical Law Glossary Item 5-382-3832 (Approx. 2 pages)
Glossary
Standard & Poor's (S&P)
Also known as S&P. Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. is a rating agency that ranks the credit-worthiness of borrowers by rating their debt or other securities using a standardized ratings scale (like Moody's). They rate common and preferred stock, bonds and commercial paper.
Long-term Issue Credit Ratings. The scale runs from AAA to D and intermediate ratings of (+) or (-) are offered at each level between AA and CCC (for example, BBB+, BBB and BBB-). S&P may also offer guidance (referred to as a credit watch) on whether it is likely to be upgraded (positive), downgraded (negative) or uncertain (neutral).
- Investment Grade: AAA, AA, A, BBB (from best quality to good quality but somewhat vulnerable to changing economic conditions).
- Non-Investment Grade (also referred to as Junk): BB, B, CCC, CC, C (speculative; from the least degree of speculation to the highest degree); D (in payment default).
Short-term Issue Credit Ratings. The scale runs from A-1 to D. An A-1 rating may be designated with a plus sign (+) to indicate that the issuer's commitment to meet its obligation is extremely strong.
- A-1, A-2, A-3 (from best quality to good quality but somewhat vulnerable to changing economic conditions).
- B, B-1, B-2, B-3 (speculative; from the least degree of speculation to the highest degree).
- C (currently vulnerable to nonpayment and dependent on favorable business, financial and economic conditions).
- D (in payment default or bankruptcy petition has been filed).