Fitch Ratings Agency
Fitch Ratings is a rating agency that is part of the “Big Three” along with Moody’s and Standard & Poors. It has two headquarters – in New York and London, as well as 51 representative offices. The staff consists of 1,500 employees. Ratings are assigned to 3,100 financial institutions, 1,600 banks, 1,400 insurance companies, 1,200 corporations, 89 states and 45,000 municipalities. The company has existed since 1912 as a publisher and since 1924 as a rating agency.
Fitch Ratings assigns international and national ratings, which are officially called issuer default ratings.
International Rating Scale
1.1 Investment Grade Ratings.
“AAA” – the highest level of creditworthiness, the lowest credit risk expectations. Assigned only if exceptionally high ability to repay financial obligations on time.
“AA” – very high creditworthiness, very low expectations for credit risk and very high ability to repay financial obligations on time.
“A” – high creditworthiness, low expectations for credit risk, high ability to repay financial obligations on time.
“BBB” – good creditworthiness, low current expectations for credit risk, adequate ability to timely repay financial obligations. This rating level is the lowest among the ratings of investment grade.
1.2 Speculative Category Ratings.
“BB” – speculative rating. Rating level “BB” means that there is a possibility of developing credit risks, especially as a result of negative economic changes that may occur over time. However, alternative business or financial resources may be available to companies to enable them to meet their financial obligations. Securities rated at this level are investment grade.
“B” is a largely speculative rating. For issuers and securities that are in compliance with their obligations, Level “B” ratings indicate significant credit risk, but a limited “safety cushion” remains. Financial commitments are currently being met, but the ability to continue to make payments depends on a stable and favorable business and economic environment.
“CCC” – Securities obligations are being met, default appears to be a real possibility. The ability to meet financial obligations depends entirely on sound and favorable business or economic conditions.
“CC” – obligations, default appears likely.
“C” – obligations are met, default appears imminent.
“RD” – this rating level indicates that the issuer has not made timely payments (subject to the applicable grace period) on some, but not all, of the principal portion of the obligations and continues to make payments on other types of obligations.
“D” – A rating of this level is assigned to an issuer or state that has defaulted on all of its financial obligations.
- A national rating is assigned in the same way, but in the format “AAA(xxx)”, “AA(xxx)”, “A(xxx)”, etc. The suffix indicates the country in which it is assigned. An organization’s international rating cannot be higher than the country rating. A national rating is relative, with the highest rating scale being the most reliable borrower in the local market, i.e. the state.
In addition, Fitch has an additional gradation for national ratings, a rating of “E(xxx)”, which indicates that there is insufficient information to assign it. This category is used if a rating has previously been suspended due to a lack of documentation from the issuer necessary to observe and support the data.
Both international and national ratings may be supplemented with the notation “on watch”, as well as the so-called forecast – a possible revision within a year or two. The rating outlook can be “positive,” “stable,” or “negative. The plus (+) or minus (-) signs are used to indicate an intermediate rating.