Moody's Credit Ratings
According to Moody's, the purpose of its ratings is to "provide investors with a simple system of gradation by which future relative creditworthiness of securities may be gauged". To each of its ratings from Aa through Caa, Moody's appends numerical modifiers 1, 2 and 3; the lower the number, the higher-end the rating. Aaa, Ca and C are not modified this way. As Moody's explains, its ratings are "not to be construed as recommendations", nor are they intended to be a sole basis for investment decisions. In addition, its ratings don’t speak to market price, although market conditions may impact credit risk.
| Moody's credit ratings | ||
|---|---|---|
| Investment grade | ||
| Rating | Long-term ratings | Short-term ratings |
| Aaa | Rated as the highest quality and lowest credit risk. | Prime-1 Best ability to repay short-term debt |
| Aa1 | Rated as high quality and very low credit risk. | |
| Aa2 | ||
| Aa3 | ||
| A1 | Rated as upper-medium grade and low credit risk. | |
| A2 | Prime-1/Prime-2 Best ability or high ability to repay short term debt |
|
| A3 | ||
| Baa1 | Rated as medium grade, with some speculative elements and moderate credit risk. | Prime-2 High ability to repay short term debt |
| Baa2 | Prime-2/Prime-3 High ability or acceptable ability to repay short term debt |
|
| Baa3 | Prime-3 Acceptable ability to repay short term debt |
|
| Speculative grade | ||
| Rating | Long-term ratings | Short-term ratings |
| Ba1 | Judged to have speculative elements and a significant credit risk. | Not Prime Do not fall within any of the prime categories |
| Ba2 | ||
| Ba3 | ||
| B1 | Judged as being speculative and a high credit risk. | |
| B2 | ||
| B3 | ||
| Caa1 | Rated as poor quality and very high credit risk. | |
| Caa2 | ||
| Caa3 | ||
| Ca | Judged to be highly speculative and with likelihood of being near or in default, but some possibility of recovering principal and interest. | |
| C | Rated as the lowest quality, usually in default and low likelihood of recovering principal or interest. | |
Read more about this topic: Moody's Investors Service
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