In the Moody for a little myth busting? The lowdown on ratings agencies
The subject is riddled with misinterpretation, but what is certain is that we need a momentous event
We’ve been down the ratings downgrade path for a long time now. So let’s lay down some lessons we’ve learnt along the way.
We know a sovereign credit rating is an independent assessment of a government’s creditworthiness – its ability to repay debt – and thus the rating assigned indicates how risky it is to invest in a government.
We also know there are three main ratings agencies: Moody’s, S&P Global Ratings, and Fitch. Each has its unique methodology for assigning sovereign credit ratings. Agencies are similar in that they’re generally assessing the same thing, and hence eventually get to more or less the same outcome. But the time it takes for each agency to get there can vary considerably...