A-
Capacity for timely payment on issues with this
designation is satisfactory. However, the relative
degree of safety is not as high as for issues designated
‘A-1’.
A-
Issues carrying this designation have an adequate
capacity for timely payment. They are, however,
more vulnerable to the adverse effects of changes
in circumstances than obligations carrying the
higher designations.
B
Issues rated ‘B’ are regarded as having only
speculative capacity for timely payment.
C
This rating is assigned to short-term debt obligations
with a doubtful capacity for payment.
D
Debt rated ‘D’ is in payment default. The ‘D’ rating
category is used when interest payments of principal
payments are not made on the date due, even if the
applicable grace period has not expired, unless
Standard & Poor’s believes such payments will be
made during such grace period.Dual Ratings
Standard & Poor’s assigns “dual” ratings to all
debt issues that have a put option or demand
feature as part of their structure.
The first rating addresses the likelihood of repay-
ment of principal and interest as due, and the second
rating addresses only the demand feature. The long-
term debt rating symbols are used for bonds to
denote the long-term maturity and the commercial
paper rating symbols for the put option (for example,
‘AAA/A-1+’). With short-term demand debt, note
rating symbols are used with the commercial paper
rating symbols (for example, ‘SP-1+/A-1+’).CreditWatch And Rating Outlooks
A Standard & Poor’s rating evaluates default risk
over the life of a debt issue, incorporating an
assessment of all future events to the extent they
are known or considered likely. But Standard &Poor’s also recognizes the potential for future per-
formance to differ from initial expectations. Rating
outlooks and CreditWatch listings address this
possibility by focusing on the scenarios that could
result in a rating change.
CreditWatch highlights potential changes in ratings
of bonds, short-term, and other fixed-income secu-
rities. Issues appear on CreditWatch when an event
or deviation from an expected trend has occurred
or is expected and additional information is necessary
to take a rating action. Such rating reviews normally
are completed within 90 days, unless the outcome
of a specific event is pending. A listing does not
mean a rating change is inevitable. However, in
some cases, it is certain that a rating change will
occur and only the magnitude of the change is unclear.
Wherever possible, a range of alternative ratings
that could result is shown. CreditWatch is not
intended to include all issues under review, and
rating changes will occur without the issue appearing
on CreditWatch. An issuer cannot automatically
appeal a CreditWatch listing, but analysts are
sensitive to issuer concerns and the fairness of
the process.
A Standard & Poor’s rating outlook assesses the
potential direction of a long-term credit rating over
the intermediate term (typically six months to two
years). In determining a rating outlook, considera-
tion is given to any changes in the economic and/or
fundamental business conditions.
An outlook is not necessarily a precursor of a
rating change or future CreditWatch action:
■Positive means that a rating may be raised,
■Negative means that a rating may be lowered,
■Stable means that a rating is not likely to change,
■Developing means a rating may be raised
or lowered.
CreditWatch designations and outlooks may be
“positive,” which indicates a rating may be raised,
or “negative,” which indicates a rating may be
lowered. “Developing” is used for those unusual sit-
uations in which future events are so unclear that
the rating potentially may be raised or lowered.
“Stable” is the outlook assigned when ratings
are not likely to be changed, but should not be
confused with expected stability of the company’s
financial performance.■Introduction10 Standard & Poor’s Public Finance Criteria 2007