• An evaluation given by Moody's, Standard & Poor's, Fitch, or other rating services of a security's creditworthiness.
• An evaluation of credit quality Moody's, S&P, and Fitch Investors Service give to companies used by investors and analysts.
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| ||Ambac: Is the holding company that provides financial guarantee insurance for both public and private sector clients. This insurance can improve credit Ratings.|
| ||Bond rating: Denotes the safety of the bonds. Probability of default generally increases as the bond Ratings decline. Bottom falls out as we go to below investment grade bonds. The highest bond rating is AAA followed by AA, A, and BBB. The lowest investment quality bond rating is BBB. All ratings below BBB are junk bonds. These are BB, B, and CCC. D denotes bonds that have already defaulted.An evaluation of the possibility of default by a bond issuer, based on an analysis of the issuer's financial condition and profit potential. Bond rating services are provided by, among others, Standard & Poor's 500, Moody's Investors Service and Fitch Investors Service.|
| ||Commercial paper: The short-term unsecured debt of corporations or companies.Short-term unsecured promissory notes issued by a corporation. The maturity of commercial paper is typically less than 270 days; the most common maturity range is 30 to 50 days or less.Abbreviated CP. Bank holding companies issue commercial paper. This is a short-term uncollateralized borrowing by the parent firm.An unsecured promissory note with a fixed maturity of no more than 270 days. Commercial paper is normally sold at a discount from face value. Interest rates are higher than CDs since CP is not insured. Interest rate is computed as follows: |
Price = 100 - Actual discount
Actual discount = (Quoted discount) * M / 360 Where M is days to maturity.
Annualized interest rate = (100 / Price) ^(365/M)A short-term, unsecured promissory note issued by a corporation that has a very high credit standing, having a yield above that paid on Government of Canada treasury bills and comparable to that available on negotiable CDs with similar maturities. A money market financial instrument. Sometimes referred to as corporate paper.Is an unsecured, short-term instrument. It has a maximum maturity of 270 days. It is issued by companies which have high credit Ratings. This instrument is a cash management tool to finance short-term financial needs. It should be noted that corporate downgrades or bankruptcies can severely damage the value of these instruments.
| ||Credit rating services: Refers to companies that rate public, private or consumer credit Ratings. The primary credit rating companies for sovereign or country and corporate ratings are: Duff and Phelps Credit Rating Company, Moodys, andStandard and Poors. For consumer scoring a major company is Fair, Isaac.|
| ||Distressed securities: Refer to issues in bankruptcy or other severely impaired securities which have very low credit Ratings.|