S
ince beginning its credit rating activities in 1916,
Standard & Poor’s Ratings Services has rated
hundreds of thousands of securities issues, corporate
and governmental issuers, and structured financings.
Standard & Poor’s began its ratings activities with
the issuance of credit ratings on corporate and
government debt issues. Responding to market
developments and needs, Standard & Poor’s has
developed and innovated methodologies and criteria
and now assesses the credit quality of, and assigns
credit ratings to, financial guarantees, recovery ratings
and bank loans, private placements, mortgage-and
asset-backed securities, mutual funds, and the ability
of insurance companies to pay claims, and assigns
market-risk ratings to managed funds.
In 2005, Standard & Poor’s published more than
500,000 ratings, including 294,000 new ratings
and 260,000 revised ratings. We have issued ratings
on debt securities in more than 100 countries.
Standard & Poor’s rates and monitors developments
pertaining to these securities and obligors from
operations in 21 countries around the world.
Standard & Poor’s believes that over the last
century credit ratings have served the U.S. securities
markets extremely well, providing an effective and
objective tool in the market’s evaluation and assess-
ment of credit risk. Standard & Poor’s recognizes
the valuable role that credit-rating agencies play
in the U.S. securities markets and is committed
to protecting and enhancing the reputation and
future of its credit-ratings business. In this regard,
Standard & Poor’s takes great care to assure that
the market views its credit ratings as highly credible
and relevant, and will continue to review its practices,
policies, and procedures on an ongoing basis and
modify or enhance them, as necessary, to ensure
that rigorous analytics, integrity, independence,
objectivity, transparency, credibility, and quality
continue as fundamental premises of its operations.Standard & Poor’s Role In The Financial Markets
Standard & Poor’s is the world’s foremost provider
of independent credit ratings, indices, risk evalua-
tion, investment research, data and information,
and operates under the basic principles of:
■Independence
■Objectivity■Credibility, and
■Transparency
Standard & Poor’s recognition as a rating agency
ultimately depends on investors’ willingness to
accept its judgments. Standard & Poor’s believes it
is important that all users of its ratings understand
how it arrives at its ratings opinions, and it regularly
publishes ratings definitions and detailed reports on
ratings criteria and methodology.
Standard & Poor’s rates more than USD $
trillion in bonds and other financial obligations of
obligors in more than 100 countries. Despite the
changing environment, Standard & Poor’s core
values remain the same-to provide high-quality,
objective, value-added analytical information to
the world’s financial markets.Credit Ratings
Standard & Poor’s began rating the debt of corporate
and government issuers nearly 100 years ago. Since
then, its credit rating criteria and methodology have
grown in sophistication and have kept pace with
the introduction of new financial products. For
example, Standard & Poor’s was the first major
rating agency to assess the credit quality of, and
assign credit ratings to, the claims-paying ability of
insurance companies (1971), financial guarantees
(1971), mortgage-backed bonds (1975), mutual
funds (1983), and asset-backed securities (1985).
A credit rating is Standard & Poor’s opinion of
the general creditworthiness of an obligor, or the
creditworthiness of an obligor with respect to a
particular debt security or other financial obligation,
based on relevant risk factors. A rating does not
constitute a recommendation to purchase, sell, or
hold a particular security. In addition, a rating does
not comment on the suitability of an investment
for a particular investor.
Standard & Poor’s credit ratings and symbols
originally applied to debt securities. As described
below, Standard & Poor’s has developed credit ratings
that may apply to an issuer’s general creditworthiness
or to a specific financial obligation. Standard &
Poor’s has historically maintained separate and
well-established rating scales for long-term and
short-term instruments. Over the years, these credit
ratings have achieved wide investor acceptance asIntroduction to Public Finance Criteria ................................................................................
6 Standard & Poor’s Public Finance Criteria 2007Introduction