Credit Rating Scales And Definitions

CREDIT RATING SCALES AND DEFINITIONS – LONG TERM: DEBT INSTRUMENTS

Rating Definition

                      AAA

Triple A(Extremely Strong Capacity)
Debt instruments rated AAA have extremely strong capacity to meet financial commitments. These are judged to be of the highest quality, with minimal credit risk.

            AA1, AA2, AA3*

Double-A

(Very Strong Capacity)

Debt instruments rated AA have very strong capacity to meet financial commitments. These are judged to be of very high quality, subject to very low credit risk.

                   A1, A2, A3

Single-A

(Strong Capacity)

Debt instruments rated A have strong capacity to meet financial commitments, but susceptible to the adverse effects of changes in circumstances and economic conditions. These are judged to be of high quality, subject to low credit risk.

           BBB1, BBB2, BBB3

Triple B

(Adequate Capacity)

Debt instruments rated BBB have adequate capacity to meet financial commitments but more susceptible to adverse economic conditions or changing circumstances. They are subject to moderate credit risk. Such rated projects possess certain speculative characteristics.

                BB1, BB2, BB3

Double B

(Inadequate Capacity)

Debt instruments rated BB have inadequate capacity to meet financial commitments. They have major ongoing uncertainties and exposure to adverse business, financial, or economic conditions. Such projects have speculative elements, and are subject to substantial credit risk.

                 B1, B2, B3

Single B

(Weak Capacity)

Debt instruments rated B have weak capacity to meet financial commitments. They have speculative elements and are subject to high credit risk.

           CCC1, CCC2, CCC3

Triple C

(very Weak Capacity)

Debt instruments rated CCC have very weak capacity to meet financial obligations. They have very weak standing and are subject to very high credit risk.

                      CC

Double C

(Extremely Weak Capacity)

Debt instruments rated CC have extremely weak capacity to meet financial obligations. They are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.

                       C

Single C

(Near to Default)

Debt instruments rated C are highly vulnerable to non-payment, have payment arrearages allowed by the terms of the documents, or subject of bankruptcy petition, but have not experienced a payment default. Payments may have been suspended in accordance with the instrument’s terms. They are typically in default, with little prospect for recovery of principal or interest.

               D(Default)

D rating will also be used upon the filing of a bankruptcy petition or similar action if payments on an obligation are jeopardized.

*Note: CRAB appends numerical modifiers 1, 2, and 3 to each generic rating classification from AA through CCC. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category.

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