Moody's, Standard & Poors' and Fitch are the three main rating agencies in Europe. Credit ratings are forward-looking opinions produced by rating agencies on the relative credit strength of issuers or instruments issued by them. Each rating agency has its own rating scale which can be found on its website. Ratings are not the output of a model but are analyst driven and the analysts can adjust the calculated scores. The analysts may give more weight to a credit factor than the standard weighting set out in the rating methodology.
Key learning objectives:
Define credit ratings and credit worthiness of a company
Explain the measurement units for credit ratings
Define the strategy on which the company is valued