A credit rating is an assessment of the creditworthiness of a borrower in general terms or with respect to a particular debt or financial obligation. A credit rating can be assigned to any entity that seeks to borrow money — an individual, corporation, state or provincial authority, or sovereign government. A high credit rating indicates a high possibility of paying back the loan in its entirety without any issues; a poor credit rating suggests that the borrower has had trouble paying back loans in the past, and might follow the same pattern in the future.
Credit assessment and evaluation for companies and governments is generally done by a credit rating agency such as Standard & Poor’s (S&P), Moody’s, or Fitch. There are a few factors credit agencies take into consideration when assigning a credit rating to an organisation. First, the agency considers the entity's past history of borrowing and paying off debts. Any missed payments or defaults on loans negatively impact the rating. The agency also looks at the entity's future economic potential. If the economic future looks bright, the credit rating tends to be higher; if the borrower does not have a positive economic outlook, the credit rating will fall.
We encourage you to learn more about credit rating agencies and detailed rating methodology
A rating expresses the likelihood that the rated party will go into default within a given time horizon. In general, a time horizon of one year or under is considered short term, and anything above that is considered long term. In the past institutional investors preferred to consider long-term ratings.
The term investment-grade historically referred to bonds and other debt securities that bank regulators and market participants viewed as suitable investments for financial institutions. Now the term is broadly used to describe issuers and issues with relatively high levels of creditworthiness and credit quality. In contrast, the term non-investment-grade, or speculative-grade, generally refers to debt securities where the issuer currently has the ability to repay but faces significant uncertainties, such as adverse business or financial circumstances that could affect credit risk.
All credit ratings are relative assessments of credit risk on a debt issuer within a given frame of reference. A global scale credit rating, for example AAA, assesses creditworthiness relative to all other debt issuers across the world. It is used primarily by global investors who have the option to invest in any country. A credit rating assigned on a national scale, for example AAA(uk), on the other hand, assesses relative creditworthiness within a country. It is used primarily by domestic investors
A national scale rating cannot be compared directly with a global scale rating, or even with the national scale rating of another country. This is because the best credit within a country may not be of a similar quality to the best credit globally; the frame of reference would therefore differ, as would the ratings. Moreover, in a national scale rating, risk factors that are common to all entities in the country cease to be differentiating elements. For instance, local elements such as political risk or fiscal situation of the sovereign are country-specific, and are likely to uniformly affect all entities within that country. Although these factors are considered for the credit analysis, they will not play a significant role in differentiating between credit profiles in that country. On the other hand, such factors may be significant risk elements in global scale ratings, as they can vary widely across countries.
An obligor (bank/country) has extremely strong capacity to meet its financial commitments
An obligor (bank/country) has very strong capacity to meet its financial commitments. It differs from the highest-rated obligors only to a small degree
|A1||A+||A-1||A+||F1||Upper medium grade
An obligor (bank/country) has strong capacity to meet its financial commitments but is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligors in higher-rated categories
|Baa1||BBB+||BBB+||Lower medium grade
An obligor (bank/country) has adequate capacity to meet its financial commitments. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitments
|Ba1||Not Prime (NP)||BB+||B||BB+||B||Speculative|
An obligor (bank/country) is less vulnerable in the near term than other lower-rated obligors, but it has the capacity to meet its financial commitments. However, it faces major ongoing uncertainties and exposure to adverse business, financial, or economic conditions, which could lead to inadequate capacity to meet its financial commitments
An obligor (bank/country) is more vulnerable than the obligor rated 'BB', but still it currently has the capacity to meet its financial commitments. Adverse business, financial, or economic conditions will likely impair its capacity or willingness to meet its financial commitments
An obligor (bank/country) rated 'CCC' is currently vulnerable, and is dependent upon favorable business, financial, and economic conditions to meet its financial commitments
An obligor is currently highly vulnerable and it is likely in, or very near, default, with some prospect of recovery of principal and interest
An obligor is highly vulnerable, perhaps in bankruptcy or in arrears but still continuing to pay out on obligations.
An obligor is not able to meet its all or some financial commitments and/or is under regulatory supervision owing to its financial condition
Investing in a term deposit usually involves limited risk because deposit products are secured against the folding of a credit institution by national deposit guarantee schemes.
Definitely not. Our mission is to become an oasis for anyone who wants to receive predictable returns without unpredictable risk
Deposit insurance is a measure implemented in many countries to protect bank depositors from losses caused by a bank's inability to pay its debts when due.
We work with banks thich have a long history on the local market, employ a significant number of people, have a strong capital base and stable future prospects.
Learn how we try to avoid such events and how we help you if they do happen.
You are the legal owner of money invested in your term deposits, therefore in an unlike event Deposit Planet folding your money will be fully protected by banks keeping your deposits.