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USE OF SYMBOLS in credit rating

Simranjeet Singh (Proprietor at S Simranjeet & Associates Company Secretaries) (4396 Points)

23 November 2010

Hello everyone can any one tell me why + or - symbols are attached to instruments while assigning credit rating to them ?

is this to convey that an instrument with "+" sign have higher rating compared to instrument with " -" sign or vice versa ??? if it is correct then it is always be the same ??? for eg a instument with "AA -" rating is stonger than rating in a lower category such as "A +" or what ???

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4 Replies

CS Richa Sharma (company secretary) (2221 Points)
Replied 23 November 2010

The sign of + (plus) or – (minus) with rating symbols indicates their relative position within the rating categories concerned.

Plus sign to distinguish the strongest credits in that category.

yes u r correct A instument with "AA -" rating is stonger than rating in a lower category such as "A +".

for eg.

Standard & Poor's investment grade ratings in order from the highest to the lowest are: AAA, AA+, AA, AA-, A+, A, A-, BBB+, BBB and BBB-.

Standard & Poor's non-investment grade ratings in order from the highest to the lowest are: BB+, BB, BB-, B+, B, B-, CCC+, CCC, CCC- CC, C, D and SD.

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Simranjeet Singh (Proprietor at S Simranjeet & Associates Company Secretaries) (4396 Points)
Replied 23 November 2010

Thanks very much Richa mam for ur reply and explanation.......

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 23 November 2010

Originally posted by : CS Richa Sharma
	Standard & Poor's investment grade ratings in order from the highest to the lowest are: AAA, AA+, AA, AA-, A+, A, A-, BBB+, BBB and BBB-. Standard & Poor's non-investment grade ratings in order from the highest to the lowest are: BB+, BB, BB-, B+, B, B-, CCC+, CCC, CCC- CC, C, D and SD.

CORRECT...

Dear Jeet, would request you to check some available red herring prospectus on internet and read the comment given by the credit rating agencies like CRISIL etc....this will help you to understand the concept in a bit practical way....search google for RHPs.

All the Best

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