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Company Details |
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Fitch, Inc. International Long-Term Credit Ratings
The following ratings scale applies to foreign currency and local currency ratings.
Investment Grade
AAA
Highest credit quality. 'AAA' ratings denote the lowest expectation of credit
risk. They are assigned only in case of exceptionally strong capacity for timely
payment of financial commitments. This capacity is highly unlikely to be adversely
affected by foreseeable events.
AA
Very high credit quality. 'AA' ratings denote a very low expectation of credit
risk. They indicate very strong capacity for timely payment of financial commitments.
This capacity is not significantly vulnerable to foreseeable events.
A
High credit quality. 'A' ratings denote a low expectation of credit risk.
The capacity for timely payment of financial commitments is considered strong. This
capacity may, nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.
BBB
Good credit quality. 'BBB' ratings indicate that there is currently a low
expectation of credit risk. The capacity for timely payment of financial commitments
is considered adequate, but adverse changes in circumstances and in economic conditions
are more likely to impair this capacity. This is the lowest investment-grade category.
Speculative Grade
BB
Speculative. 'BB' ratings indicate that there is a possibility of credit
risk developing, particularly as the result of adverse economic change over time;
however, business or financial alternatives may be available to allow financial
commitments to be met. Securities rated in this category are not investment grade.
B
Highly speculative. 'B' ratings indicate that significant credit risk is
present, but a limited margin of safety remains. Financial commitments are currently
being met; however, capacity for continued payment is contingent upon a sustained,
favourable business and economic environment.
CCC, CC, C
High default risk. Default is a real possibility. Capacity for meeting financial
commitments is solely reliant upon sustained, favourable business or economic developments.
A 'CC' rating indicates that default of some kind apears probable. 'C' ratings signal
imminent default.
DDD, DD, D
Default. The ratings of obligations in this category are based on their prospects
for achieving partial or full recovery in a reorganization or liquidation of the
obligor. While expected recovery values are highly speculative and cannot be estimated
with any precision, the following serve as general guidelines. 'DDD' obligations
have the highest potential for recovery, around 90% - 100% of outstanding amounts
and accrued interest. "DD' indicates potential recoveries in the range of 50% -
90% and 'D' the lowest recovery potential, i.e., below 50%.
Entities rated in this category have defaulted on some or all of their obligations.
Entities rated 'DDD' have the highest prospect for resumption of performance or
continued operation with or without a formal reorganization process. Entities rated
'DD' and 'D' are generally undergoing a formal reorganization or liquidation process;
those rated 'DD' are likely to satisfy a higher portion of their outstanding obligations,
while entities rated 'D' have a poor prospect of repaying all obligations.
Standard and Poor's Long-term Issue Credit Ratings
Issue credit ratings are based in varying degrees, on the following considerations:
- Likelihood of payment—capacity and willingness of the obligor to meet its
financial commitment on an obligation in accordance with the terms of the obligation;
- Nature of and provisions of the obligation; and
- Protection afforded by, and relative position of, the obligation in the event
of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy
and other laws affecting creditors' rights.
The issue ratings definitions are expressed in terms of default risk. As such, they
pertain to senior obligations of an entity. Junior obligations are typically rated
lower than senior obligations, to reflect the lower priority in bankruptcy, as noted
above.
AAA
An obligation rated 'AAA' has the highest rating assigned by Standard & Poor's.
The obligor's capacity to meet its financial commitment on the obligation is extremely
strong.
AA
An obligation rated 'AA' differs from the highest-rated obligations only in small
degree. The obligor's capacity to meet its financial commitment on the obligation
is very strong.
A
An obligation rated 'A' is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than obligations in higher-rated categories.
However, the obligor's capacity to meet its financial commitment on the obligation
is still strong.
BBB
An obligation rated 'BBB' exhibits adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to lead to a weakened
capacity of the obligor to meet its financial commitment on the obligation.
BB, B, CCC, CC, and C
Obligations rated 'BB', 'B', 'CCC', 'CC', and 'C' are regarded as having significant
speculative characteristics. 'BB' indicates the least degree of speculation and
'C' the highest. While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major exposures
to adverse conditions.
BB
An obligation rated 'BB' is less vulnerable to nonpayment than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse business,
financial, or economic conditions, which could lead to the obligor's inadequate
capacity to meet its financial commitment on the obligation.
B
An obligation rated 'B' is more vulnerable to nonpayment than obligations rated
'BB', but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial, or economic conditions will likely
impair the obligor's capacity or willingness to meet its financial commitment on
the obligation.
CCC
An obligation rated 'CCC' is currently vulnerable to nonpayment and is dependent
upon favorable business, financial, and economic conditions for the obligor to meet
its financial commitment on the obligation. In the event of adverse business, financial,
or economic conditions, the obligor is not likely to have the capacity to meet its
financial commitment on the obligation.
CC
An obligation rated 'CC' is currently highly vulnerable to nonpayment.
C
The 'C' rating may be used to cover a situation where a bankruptcy petition has
been filed or similar action has been taken, but payments on this obligation are
being continued.
D
An obligation rated 'D' is in payment default. The 'D' rating category is used when
payments on an obligation are not made on the date due even if the applicable grace
period has not expired, unless Standard & Poor's believes that such payments will
be made during such grace period. The 'D' rating also will be used upon the filing
of a bankruptcy petition or the taking of a similar action if payments on an obligation
are jeopardized.
Plus (+) or minus (-)
The ratings from 'AA' to 'CCC' may be modified by the addition of a plus or minus
sign to show relative standing within the major rating categories.
c
The 'c' subscript is used to provide additional information to investors that the
bank may terminate its obligation to purchase tendered bonds if the long-term credit
rating of the issuer is below an investment-grade level and/or the issuer's bonds
are deemed taxable.
p
The letter 'p' indicates that the rating is provisional. A provisional rating assumes
the successful completion of the project financed by the debt being rated and indicates
that payment of debt service requirements is largely or entirely dependent upon
the successful, timely completion of the project. This rating, however, while addressing
credit quality subsequent to completion of the project, makes no comment on the
likelihood of or the risk of default upon failure of such completion. The investor
should exercise his own judgment with respect to such likelihood and risk.
*
Continuance of the ratings is contingent upon Standard & Poor's receipt of an executed
copy of the escrow agreement or closing documentation confirming investments and
cash flows.
r
The 'r' highlights derivative, hybrid, and certain other obligations that Standard
& Poor's believes may experience high volatility or high variability in expected
returns as a result of noncredit risks. Examples of such obligations are securities
with principal or interest return indexed to equities, commodities, or currencies;
certain swaps and options; and interest-only and principal-only mortgage securities.
The absence of an 'r' symbol should not be taken as an indication that an obligation
will exhibit no volatility or variability in total return.
N.R.
Not rated.
Debt obligations of issuers outside the United States and its territories are rated
on the same basis as domestic corporate and municipal issues. The ratings measure
the creditworthiness of the obligor but do not take into account currency exchange
and related uncertainties.
Bond Investment Quality Standards
Under present commercial bank regulations issued by the Comptroller of the Currency,
bonds rated in the top four categories ('AAA', 'AA', 'A', 'BBB', commonly known
as investment-grade ratings) generally are regarded as eligible for bank investment.
Also, the laws of various states governing legal investments impose certain rating
or other standards for obligations eligible for investment by savings banks, trust
companies, insurance companies, and fiduciaries in general.