Standard & Poor's

From Wikipedia, the free encyclopedia

Standard & Poor's (S&P) is a division of McGraw-Hill that publishes financial research and analysis on stocks and bonds. It is one of the top three companies in this business, along with Moody's and Fitch Ratings.

It is well known for its US-based S&P 500, the Australian S&P/ASX 200 stock market index, and the Canadian S&P/TSX.

Contents

[edit] Business Description

Standard & Poor's operates as a financial services company. Its products and services include credit ratings, equity research, S&P indices, funds, risk solutions, governance services, evaluations, and data services. The company’s division, Capital IQ, provides information and workflow solutions to financial institutions, advisory firms, and corporations. Capital IQ provides integrated financial information and technology solutions, including auditable company financials, a screener combining financial and nonfinancial items, an integrated public and private capital market database, and various relationship development tools. The company serves institutional professionals, financial institutions, corporations, financial advisors, and individual investors worldwide. The company was founded in 1860 and is headquartered in New York City. Standard & Poor's operates as a subsidiary of The McGraw-Hill Companies, Inc.

[edit] Credit ratings

As a credit rating agency, Standard & Poor's issues credit ratings for the debt of companies. As such, it has designated a Nationally Recognized Statistical Rating Organization by the U.S. Securities and Exchange Commission.

It issues both short-term and long-term credit ratings.

[edit] Long-Term Credit Ratings

S&P rates companies on a scale from AAA to D. Intermediate ratings are offered at each level between AA and B (i.e., BBB+, BBB and BBB-). For some companies, S&P may also offer guidance (termed a "credit watch") as to whether it is likely to be upgraded (positive), downgraded (negative) or uncertain (neutral).

Investment Grade

  • AAA  : the best quality companies, reliable and stable
  • AA  : quality companies, a bit higher risk than AAA
  • A  : economic situation can affect finance
  • BBB  : medium class companies, which are satisfactory at the moment

Non-Investment Grade (also known as junk bonds)

  • BB  : more prone to changes in the economy
  • B  : financial situation varies noticeably
  • CCC  : currently vulnerable and dependent on favorable economic conditions to meet its commitments
  • CC  : highly vulnerable, very speculative bonds
  • C  : highly vulnerable, perhaps in bankruptcy or in arrears but still continuing to pay out on obligations
  • CI  : past due on interest
  • R  : under regulatory supervision due to its financial situation
  • SD  : has selectively defaulted on some obligations
  • D  : has defaulted on obligations and S&P believes that it will generally default on most or all obligations
  • NR  : not rated

[edit] Short-Term Issue Credit Ratings

S&P rates specific issues on a scale from A-1 to D. Within the A-1 category it can be designated with a plus sign (+). This indicates that the issuer's commitment to meet its obligation is extremely strong. Country risk and currency of repayment of the obligor to meet the issue obligation are factored into the credit analysis and reflected in the issue rating.

  • A-1  : obligor's capacity to meet its financial commitment on the obligation is strong
  • A-2  : is susceptible to adverse economic conditions however the obligor's capacity to meet its financial commitment on the obligation is satisfactory
  • A-3  : adverse economic conditions are likely to weaken the obligor's capacity to meet its financial commitment on the obligation
  • B  : has a significant speculative characteristics. The obligor currently has the capacity to meet its financial obligation but faces major ongoing uncertainties that could impacts its financial commitment on the obligation
  • C  : currently vulnerable to nonpayment and is dependent upon favourable business, financial and economic conditions for the obligor to meet its financial commitment on the obligation
  • D  : is in payment default. Obligation not made on due date and grace period may not have expired. The rating is also used upon the filing of a bankruptcy petition.

[edit] Stock Market Indices

Standard & Poor's publishes a large number of stock market indices, covering every region of the world, market capitalization level, and type of investment (e.g. indices for REITs and Preferred stocks)

[edit] Publications

Standard & Poor's publishes a weekly (48 times a year) stock market analysis newsletter called The Outlook which is issued both in print and online to subscribers.

[edit] See also

[edit] External links

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