rating agencies


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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 agencies

Companies that grade securities so as to indicate the quality of the securities for investors. The two major rating services are Moody's Investor Services and Standard & Poor's Corporation. Two lesser known rating firms are Duff & Phelps and Fitch Investors Service.
References in periodicals archive ?
Russia has often criticized international rating agencies such as Fitch, Moody's and Standard&Poor's, which Moscow believes serve US interests around the world.
The Union Cabinet today approved the proposal of the Ministry of Information and Broadcasting for bringing out a comprehensive regulatory framework in the form of guidelines for Television Rating Agencies in India.
THE Telecom Regulatory Authority of India ( TRAI) on Wednesday recommended new guidelines for TV rating agencies for credible and transparent rating system.
Criticism of global credit rating agencies and their methodologies continued to roll out unabated this week after an (http://www.
As Government policies failed on growth, jobs and borrowing, Osborne spent the last year clinging on to the only thing he had left - the support of the credit rating agencies.
In fact, some of these rating agencies have had a very poor record in the past.
According to Reuters, the European Central Bank (ECB) is worried that competition among credit rating agencies could affect quality of ratings of firms in the region.
serious" and called for rigiorous rules to control the rating agencies.
Fast forward nearly a half century to the 1970s, when the rating agencies made a change that would forever alter their relationship with corporations.
Credit rating agencies have faced a blaze of criticism in recent years about whether their rosy ratings helped create the global economic meltdown, by causing billions of dollars in losses to investors who counted on them to assess the risk of assets they were buying.
THERE IS PLENTY OF BLAME TO GO AROUND in the credit crisis, and many investors and public officials have been placing it on the credit rating agencies that gave AAA ratings to some of the mortgage-backed financial instruments that allegedly contributed to billions in investor losses.
4173) relating to the regulation of Credit Rating Agencies.