What is Standard & Poor’s (S&P) Credit Ratings


Currently, there are three (3) major credit rating agencies in the world. They are Fitch Ratings, Moody’s & Standard & Poor’s.  Fitch Ratings & Standard & Poor’s are using the same scale from AAA to D which first introduced in 1924.

S&P credit ratings are the agency’s forward-looking opinions about credit risk. It measures about the ability and willingness of an issuer, such as government, to meet its financial obligations in full and on time.

The ratings are based on analysis on economic and financial condition and as well as financial history of borrowing and repayment

Credit ratings are important for countries as they seek international funding for development and any downgrade would mean higher borrowing costs. For the investors, credit ratings is used in making investment decisions.

The table below is the S&P credit rating scale and it’ s definitions.

Credit Ratings Definitions
AAA Extremely strong capacity to meet financial commitments. Highest Rating.
AA Very strong capacity to meet financial commitments.
A Strong capacity to meet financial commitments, but somewhat susceptible to adverse economic conditions and changes in circumstances.
BBB Adequate capacity to meet financial commitments, but more subject to adverse economic conditions.
BBB- Considered lowest investment grade by market participants.
BB+ Considered highest speculative grade by market participants.
BB Less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic conditions.
B More vulnerable to adverse business, financial and economic conditions but currently has the capacity to meet financial commitments.
CCC Currently vulnerable and dependent on favorable business, financial and economic conditions to meet financial commitments.
CC Currently highly vulnerable.
C Currently highly vulnerable obligations and other defined circumstances.
D Payment default on financial commitments.

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.

At the time of writing, there are 18 countries having the highest AAA rating as specified in the table below. Malaysia is having A- rating while Greece is having the lowest S&P credit rating, CC due to their financial difficulties.

Country Credit Ratings Outlook
Australia AAA Stable
Austria AAA Stable
Canada AAA Stable
Denmark AAA Stable
Finland AAA Stable
France AAA Stable
Germany AAA Stable
Guernsey AAA Stable
Hong Kong AAA Stable
Isle of Man AAA Stable
Liechtenstein AAA Stable
Luxembourg AAA Stable
Netherlands AAA Stable
Norway AAA Stable
Singapore AAA Stable
Sweden AAA Stable
Switzerland AAA Stable
United Kingdom AAA Stable
Malaysia A- Stable
Greece CC Negative

Credit ratings for other countries can be found in S&P webpage or wikipedia.

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