Jul 3, 2010

Standard & Poor's - Standard & Poor's (S&P) is a division of McGraw-Hill that publishes financial research and analysis on stocks and bonds

 History

Standard & Poor's traces its history back to 1860, with the publication by Henry Varnum Poor of History of Railroads and Canals in the United States. This book was an attempt to compile comprehensive information about the financial and operational state of U.S. railroad companies. Henry Varnum went on to establish H.V. and H.W. Poor Co with his son, Henry William, and published updated versions of this book on an annual basis.
In 1906 Luther Lee Blake founded the Standard Statistics Bureau, with the view to providing financial information on non-railroad companies. Instead of an annually published book Standard Statistics would use 5" x 7" cards, allowing for more frequent updates.
In 1941, Poor and Standard Statistics merged to become Standard & Poor's Corp. Then in 1966 S&P was acquired by The McGraw-Hill Companies, and now encompasses the Financial Services division.

Long-term credit ratings

S&P rates borrowers on a scale from AAA to D. Intermediate ratings are offered at each level between AA and CCC (e.g., BBB+, BBB and BBB-). For some borrowers, 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 borrowers, reliable and stable (many of them governments)
  • AA  : quality borrowers, a bit higher risk than AAA
  • A  : economic situation can affect finance
  • BBB  : medium class borrowers, 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

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 very 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 significant speculative characteristics. The obligor currently has the capacity to meet its financial obligation but faces major ongoing uncertainties that could impact its financial commitment on the obligation
  • C  : currently vulnerable to nonpayment and is dependent upon favorable 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.

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)
These indices include:





Posted by at