A 3 adequate capacity to meet financial obligations

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A-3 adequate capacity to meet financial obligations but adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to meet financial commitments. B vulnerable and has significant speculative characteristics; currently has the capacity to meet financial commitments, however, faces major ongoing uncertainties which could lead to inadequate capacity to meet its financial commitments. Ratings of 'B-1', 'B-2', and 'B-3' can be assigned to indicate finer distinctions within the' B' category; that is B-1, B-2 and B-3 in order of decreasing capacity to meet financial commitments over the short-term. C currently vulnerable to nonpayment; dependent on favorable business, financial, and economic conditions to meet financial commitments. Periodically, S&P provides updated information on its ratings to the market in two forms: rating outlooks and CreditWatch. A rating outlook assesses how changes in the macroeconomy can affect a company's long-term credit rating in the intermediate term, typically six months to two years. The economic or business changes in a rating outlook are often generic and trends are still developing. A CreditWatch is more specific than a rating outlook as it focuses on identifiable events and trends that cause the S&P analysis to reevaluate existing ratings. Ratings outlooks and CreditWatch take the following forms: "positive" or "negative," meaning that a rating might be raised or lowered, respectively. A "developing" rating outlook or CreditWatch means that the rating can change but S&P does not know the direction. Neither ratings outlooks nor CreditWatch signify that a specific credit rating will change, only that S&P is performing ongoing analysis and that the rating can change. Moody's Credit Risk Analysis Moody's considers the following four factors in its credit risk analysis of companies. Size, Scale and Diversification Product Portfolio and Profitability Financial Strength Financial Policies Moody's classifies its long-term issuer ratings from Aaa through C. This yields nine distinct ratings; their meanings follow: highest quality with minimal credit risk. high quality with very low credit risk. upper-medium grade with low credit risk. medium grade, moderate credit risk; may possess certain speculative characteristics. speculative elements with substantial credit risk. speculative with high credit risk. poor standing with very high credit risk. highly speculative and are in, or very near, default, with some prospect of recovery of principal and interest. C lowest rated class; in default, with little prospect for recovery of principal or interest. Then, for ratings Aa through Caa, Moody's can modify the rating by adding a l , 2, or 3 to show relative standing within that rating category (where a 1 indicates a higher ranking). This creates 23 distinct ratings for companies that issue long-term debt.
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