Search

What is Moody's Rating?

Moody's ratings: Moody's Investors Service downgraded the Government of India's sovereign credit rating for the first time in the last two decades. The agency has also estimated a decline in the GDP by 4%.
Jun 2, 2020 18:54 IST
facebook Iconfacebook Iconfacebook Icon
Moody's Rating
Moody's Rating

On June 1, 2020, Moody's Investors Service downgraded the Government of India's sovereign credit rating for the first time in the last two decades. The agency has also estimated a decline in the GDP by 4%. The Moody's has downgraded foreign currency and local-currency long term issuer rating for India from Baa2 to Baa3. The negative rating means that there could be another downgrade in the future. Despite several reforms by the government such as GST, FRBM Act, etc., there is a very little impact on India's growth and economy. Fiscal deficit target of India continues to slip and the debt burden has risen up. 

IMF: The world will face the worst recession as the global economy will contract by 3%

What is Moody's rating?

Moody's Investors Service, is an organization that rates the creditworthiness of borrowers. The ratings are based on a standardized rating scale and measure the expected investor loss in the event of default. Moody's rates debt securities in several bond market segments such as government bonds, fixed-income funds, banking sectors, etc.

Moody's rating scale:

Moody's Investors Service use a standardized rating scale from Aaa to C. Here, Aaa is the highest and C is the lowest. Moody's credit ratings provide investors with a simple system of gradation by which future relative creditworthiness of securities may be gauged.   

Moody's Credit Ratings (Investment Grade)
Rating Long Term Rating  Short Term Rating
Aaa Highest Quality and Lowest Credit Risk Prime 1: Best ability to repay short term debt
Aa1 High Quality and very Low Credit Risk
Aa2
Aa3
A1 Upper-medium Grade and Low Credit Risk
A2 Prime 1/ Prime 2: Best or high ability to repay short term debt
A3
Baa1 Medium Grade and Moderate Credit Risk Prime 2: High ability to repay short term debt
Baa2  Prime 2/ Prime 3: High ability or acceptable ability to repay short term debt
Baa3 Prime 3: Acceptable ability to repay short term debt

 

Moody's Credit Ratings (Speculative Grade)
Rating Long Term Rating  Short Term Rating
Ba1 Speculative Elements and a Significant Credit Risk No Prime: DO NOT FALL with any of the prime categories
Ba2
Ba3
B1 Speculative Elements and a High Credit Risk 
B2
B3
Caa1 Poor Elements and Very Credit Risk
Caa2
Caa3
Ca Highly Speculative and may be near or in default, but some possibility of recovering principal and interest
C Lowest Quality, in default and low possibility of recovering principal and interest

In 1909, John Moody founded Moody's Investors Service to produce statistics related to stocks and bonds with ratings. In 1975, the U.S. Securities and Exchange Commission recognized the Moody's Investors Service as a Nationally Recognized Statistical Rating Organization (NRSRO). 

Why people invest in Gold during the recession and why is it considered safe?

Related Categories