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CONTENTS

 * 00Back to Top
 * 01About Rating Definitions
 * 02Ratings Scales
 * 03Why Ratings Matter
 * 04Contact


RESOURCES

 * Rating Definitions
 * Ratings Process
 * Rating Performance
 * What Credit Ratings Mean
 * Education Hub
 * Rating Confirmations in Structured Finance and Covered Bonds
 * National Ratings Correspondence Tables
 * Ratings Products & Tools
 * Research & Analytics


FITCH WIRE

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RATING DEFINITIONS



Explore Fitch's ratings scales and definitions using our interactive tool below
or download and read the report.



Download ReportInteractive Rating ScalesWhat Credit Ratings Mean


01ABOUT RATING DEFINITIONS

Fitch Ratings publishes credit ratings that are forward-looking opinions on the
relative ability of an entity or obligation to meet financial commitments.
Issuer default ratings (IDRs) are assigned to corporations, sovereign entities,
financial institutions such as banks, leasing companies and insurers, and public
finance entities (local and regional governments).  Issue level ratings are also
assigned, often include an expectation of recovery and may be notched above or
below the issuer level rating. Issue ratings are assigned to secured and
unsecured debt securities, loans, preferred stock and other instruments,
Structured finance ratings are issue ratings to securities backed by receivables
or other financial assets that consider the obligations’ relative vulnerability
to default. 

Credit ratings are indications of the likelihood of repayment in accordance with
the terms of the issuance.  In limited cases, Fitch may include additional
considerations (i.e., rate to a higher or lower standard than that implied in
the obligation’s documentation). Please see the section Specific Limitations
Relating to Credit Rating Scales for details.

Fitch Ratings also publishes other ratings, scores and opinions. For example,
Fitch provides specialized ratings of servicers of residential and commercial
mortgages, asset managers and funds. In each case, users should refer to the
definitions of each individual scale for guidance on the dimensions of risk
covered in each assessment.

Fitch’s credit rating scale for issuers and issues is expressed using the
categories ‘AAA’ to ‘BBB’ (investment grade) and ‘BB’ to ‘D’ (speculative grade)
with an additional +/- for AA through CCC levels indicating relative differences
of probability of default or recovery for issues. The terms “investment grade”
and “speculative grade” are market conventions and do not imply any
recommendation or endorsement of a specific security for investment purposes.
Investment grade categories indicate relatively low to moderate credit risk,
while ratings in the speculative categories signal either a higher level of
credit risk or that a default has already occurred.

Fitch may also disclose issues relating to a rated issuer that are not and have
not been rated. Such issues are also denoted as ‘NR’ on its web page.

Credit ratings express risk in relative rank order, which is to say they are
ordinal measures of credit risk and are not predictive of a specific frequency
of default or loss. For information about the historical performance of ratings,
please refer to Fitch’s Ratings Transition and Default studies, which detail the
historical default rates. The European Securities and Markets Authority also
maintains a central repository of historical default rates.

Fitch’s credit ratings do not directly address any risk other than credit risk. 
Credit ratings do not deal with the risk of  market value loss due to changes in
interest rates, liquidity and/or other market considerations. However, market
risk may be considered to the extent that it influences the ability of an issuer
to pay or refinance a financial commitment. Ratings nonetheless do not reflect
market risk to the extent that they influence the size or other conditionality
of the obligation to pay upon a commitment (for example, in the case of payments
linked to performance of an equity index).

Fitch will use credit rating scales to provide ratings to privately issued
obligations or certain note issuance programs, or for private ratings using the
same public scale and criteria. Private ratings are not published, and are only
provided to the issuer or its agents in the form of a rating letter.

The primary credit rating scales may also be used to provide ratings for a
narrower scope, including interest strips and return of principal or in other
forms of opinions such as Credit Opinions or Rating Assessment Services.

Credit Opinions are either a notch- or category-specific view using the primary
rating scale and omit one or more characteristics of a full rating or meet them
to a different standard. Credit Opinions will be indicated using a lower-case
letter symbol combined with either an ‘*’ (e.g. ‘bbb+*’) or (cat) suffix to
denote the opinion status. Credit Opinions will be typically point-in-time but
may be monitored if the analytical group believes information will be
sufficiently available. 

Rating Assessment Services are a notch-specific view using the primary rating
scale of how an existing or potential rating may be changed by a given set of
hypothetical circumstances. While Credit Opinions and Rating Assessment Services
are point-in-time and are not monitored, they may have a directional Watch or
Outlook assigned, which can signify the trajectory of the credit profile.

Ratings assigned by Fitch are opinions based on established, approved and
published criteria. A variation to criteria may be applied but will be
explicitly cited in our rating action commentaries (RACs), which are used to
publish credit ratings when established and upon annual or periodic reviews.

Ratings are the collective work product of Fitch, and no individual, or group of
individuals, is solely responsible for a rating. Ratings are not facts and,
therefore, cannot be described as being "accurate" or "inaccurate." Users should
refer to the definition of each individual rating for guidance on the dimensions
of risk covered by the rating.


02RATINGS SCALES




03WHY RATINGS MATTER

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Video


WHY RATINGS MATTER



As part of the Museum of American Finance’s CEO series “Why Wall Street
Matters,” Fitch Group CEO Paul Taylor explains how credit ratings work and their
role in the global economy.




04CONTACT


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For more information on Fitch’s ratings process and how we can help issuers make
credit judgments with confidence.



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