Research Primer: Understanding S&P’s Ratings Definitions
As part of its efforts to increase transparency around its ratings process, Standard & Poor’s Ratings Services has published Understanding Standard & Poor’s Rating Definitions.
The publication is designed to further promotes greater understanding of ratings, including differences among the various rating categories, S&P said. Ratings embody multiple factors that compose the overall assessment of creditworthiness.
The primary factor in Standard & Poor’s analysis of creditworthiness is likelihood of default, although payment priority, potential repayment following default, and credit stability are factors that can also play a role in Standard & Poor’s assessment of credit risk.
The article also highlights the economic stress scenarios Standard & Poor’s uses
as part of calibrating its criteria for various ratings categories across sectors. This includes an appendix detailing the stress levels during previous recessions and financial crises, dating back to Britain’s Panic of 1797.
Full details are available in Understanding Standard & Poor’s Ratigs Definitions.
You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
