rating agency

Credit Rating Agency

A company that provides investors with assessments of an investment's risk. The issuers of investments, especially debt securities, pay credit rating agencies to provide them with ratings. A high rating indicates low risk and may therefore encourage investors to buy a security. Additionally, banks may only invest in securities with a high rating from two or more credit rating agencies. The SEC recognizes 10 firms as credit rating agencies; Fitch, S&P, and Moody's are the three most prominent. However, the methods of credit ratings agencies have been subject to criticism. For example, most agencies gave high-risk mortgage-backed securities top ratings until they defaulted at the collapse of the housing bubble.

Rating Service

A company that evaluates preferred stocks and debt securities based on the likelihood of default. The ratings service provides an objective rating to the security; the rating is higher when the likelihood of default is lower. There are three main ratings services: Moody's, Fitch, and Standard & Poor's. Companies issuing new preferred stocks or debt securities pay one or more of the ratings services to have their securities rated. Banks are not allowed to invest in securities with ratings below a certain level. See also: Investment-grade, Junk.

rating agency

A company that evaluates the creditworthiness and strength of other companies and assigns a score to them,such as A,AA,and so on.

References in periodicals archive ?
A Russian-Chinese rating agency will be created which will use the same tools [and] criteria to evaluate investment projects of countries and regions that are used by existing rating agencies," the Minister was quoted by RIA Novosti as saying.
The rating agency shall submit the detailed methodology to the Government and also publish it on its website.
com)-- In August 2010, Michael formally retired from Moody's Investors Service, completing a 25-year career with the US Credit Rating Agency.
JUST 10 days ago, George Osborne desperately tried to claim that a statement from one credit rating agency meant the world had confidence in his policies, even though Britain is one of just two G20 countries in a double-dip recession.
Chidambaram on Wednesday rejected the downgrading warning by rating agency Standard and Poor's, and expressed confidence that Indian economy will be on a high growth path beginning this year
incorrectg rating of France by the rating agency Standard and Poor's as
Stress tests are an evaluation method that entails a rating agency assessing credit-worthiness by posing different worst-case economic scenarios to determine the vulnerability of the company.
However," she continued, "where a rating agency has disseminated their ratings to a select group of investors rather than to the public at large"--as was the case in Abu Dhabi Commercial Bank--"the rating agency is not afforded the same protection.
Lawrence White, an economics professor at New York University's Stern School, cited another SEC change that aims to further increase competition by requiring that issuers of structured finance products provide any rating agency that requests it with the information necessary to rate the products.
In complying with corporate regulations, Members United utilized ratings as a key metric but also reviewed rating agency comments, analysis from other providers like brokers, analysts and industry sources, its own internal modeling, the historical performance of asset types and forward-looking reviews by industry experts.
The rating agency also said that the country was facing a high risk of capital flight despite a EUR20bn aid package led by the International Monetary Fund.