What does the rating mean? Credit rating. What does the Baa1 rating assigned to Russia by Moody's mean?
Rating (rating) - ranking, prioritization, evaluation, order, classification. Rating means the determination of any evaluation parameter or group of parameters according to a specific evaluation algorithm, according to a given ranking scale. Essentially, a rating is a measure of the popularity of something. The rating is determined by surveying a large target group, or a limited group of experts.
Rating in sales- a cumulative indicator of the popularity of a product or service expressed in an assessment of not just the volume of purchases of a given product for a period, but also in the number of requests for a given product, inventory turnover, and profitability of transactions with this product. For determining popularity rating The number of downloads of trial versions, views of product pages in the catalog, etc. can be estimated.
Rating of companies (counterparty rating) - an estimated ranking of purchasing companies (suppliers) according to a group of parameters: solvency, revenue, profitability of transactions, depending on the importance and value of which the expert determines the company’s position in the ranking.
Rating in advertising (Rating) %, thousand people - quantitative assessment of the audience. The rating is calculated as the percentage of the audience that viewed (listened to) the advertising message at a given time to the entire audience that had the opportunity to see (hear) the message. A rating can be defined as a portion of the target audience that is in contact with a specific advertising medium and (or) message.
TVR rating- one of the rating indicators in media planning, expressed as a percentage of the ratio of the audience of the estimated time interval to the total number of the general population. The rating is used in the analysis of television broadcasts, promising networks for forecasting long time intervals: morning broadcast, afternoon broadcast, pre-prime, prime, night broadcasting.
Total rating GRP (Gross Rating Points) - the overall rating of all advertising media in which contextual advertising is placed, designed for one target audience. This indicator allows us to evaluate the advertising prospects of the planned broadcast schedule of a television channel.
GRP Forecast Rating- the sum of the ratings of all spots that make up this advertising campaign. The total indicators allow us to estimate the cost of an advertising campaign carried out on a particular television channel. The predictive rating plays a significant role in planning the effectiveness of advertising on television and the entire advertising campaign. Advertising agencies use predicted ratings to sell television advertising opportunities and media planning. The predicted GRP rating, as a rule, is always overestimated by media sellers, and in practice the rating is lower than expected, and only for pilot TV projects with highly growing popularity can the expected GRP be lower than the actual one.
The rating agency (RA) Standard & Poor's (S&P) is an international company that specializes in researching and assessing the creditworthiness of issuers of securities. This agency provides such a service as assigning an international credit rating. Its customers are financial companies, firms, and states. The presence of a rating provides an opportunity for issuers to offer their ratings to a fairly wide range of investors. A credit rating makes a lender better known and improves its reputation.
Characteristics of RA “Standard & Poor’s”
This entity is a subsidiary of the American McGraw-Hill, which is engaged in research into financial market analytics.
The history of this organization goes back about 150 years. Representative offices of the RA “Standard & Poor’s” are located in 23 countries of the world. This organization is also known as the founder and editor of the Australian S&P 200 stock index and the American S&P500.
Functions of RA “Standard & Poor’s”:
Supervisory;
Informative;
Regulatory;
prognostic.
Services of RA “Standard & Poor’s”:
selling analytical information and the results of your research to investors.
Ratings of RA “Standard & Poor’s”
This organization uses the following letters to designate a long-term rating of so-called “safe investments”:
A, A+, A- - such credit ratings are characterized as “above average reliability”, with fairly effective protection factors. A credit rating with the designation A- indicates that during economic crises there are risks of non-payment of the principal or dividends on it.
BBB+, BBB, BBB- - credit ratings of the level of “reliability below average”, at which the probability of repaying the loan and interest is considered adequate, and the degree of risk varies depending on the stage of development of the country’s economy.
Speculative or, in other words, “junk”, non-investment ratings from Standard & Poor’s:
B+, B, B- - the degree of financial protection varies depending on external financial and economic conditions and on the stages of economic development of the state.
Short answer: remember a few simple rules and pay attention not only to the letters, but also to the analysts’ explanations.
Long answer.
The press often contains messages like “The Fitch rating agency has downgraded the rating of such and such a bank to BBB-, the forecast is stable.” And it’s not clear what this means: either it’s time to run to the bank to get the money, or it’s too late, or it’s still normal and the rating remains high. Moreover, there are several such agencies and each of them has its own rating scale with its own letters, numbers and even signs. How to figure this out?
First, let's talk about what a “rating” is. The main thing you need to understand is that the rating from the agency is the opinion of several analysts, based on an assessment of the bank’s reporting and additional information. This opinion may be erroneous, biased, not very accurate, or simply outdated. Those who follow events in the financial world remember that world rating agencies “missed” the crisis of 2008, when the most reliable banks in terms of ratings were on the verge or beyond the brink of collapse. That incident undermined the public’s trust in the ratings, but they still shouldn’t be completely discarded; they carry some useful information. However, I will emphasize once again: the rating is an opinion (possibly erroneous) of living people, based mostly on official (possibly distorted) information, and not some absolute, strictly mathematical truth.
Russian banks are rated by three international agencies S&P, Fitch and Moody’s and several Russian ones - Rus-rating, Expert-RA, NRA and AK&M. It is not at all necessary that each agency evaluates each bank: usually a bank has 2-3 ratings in total, of which 1-2 are from international agencies and 1-2 from Russian ones. International agencies have two scales - international and national. Long-term and short-term ratings and ratings of obligations in foreign and domestic currencies are assigned separately. In general, in fact, there are a lot of ratings and each of them shows something different. In addition, in addition to the rating, the agency gives a forecast for its change: negative (the rating may be lowered at the next recalculation), stable (the rating will most likely not change) and positive (the rating may be increased). Usually, when they talk about a “bank rating” without specification, they mean a long-term international rating, but if you wish, you can look at other ratings.
The international rating of a bank cannot be higher than the international rating of the country, therefore, no matter how strong and problem-free the bank may be, its rating may be far from the highest ratings - simply because there are country risks common to all local banks. Accordingly, when a country's rating is downgraded, international bank ratings are also revised - downward or upward. Therefore, you should not be afraid of the rather low BBB- rating, which is assigned to the most reliable Russian banks by S&P, because Russia has exactly the same rating. Accordingly, on the national scale, such banks have a rating of ruAAA, which cannot be higher.
The earlier the letter is in the alphabet, the better (A - excellent, B - good, C - bad, D - very bad);
- the more letters in the rating, the better, if we are talking about the same letters (BBB is better than BB, but A is better than BBB);
- the smaller the number (if there is one), the better (Baa1 is better than Baa3);
- “+” is better than nothing, and nothing is better than “-”.
In general, all ratings that start with A can be considered very good. Three-letter ratings starting with B (BBB with plus and minus signs or Baa with numbers) are decent. The remaining ratings starting with B are speculative, that is, acceptable, but requiring special attention to this bank. Ratings of C are frankly weak; ratings of D mean that the bank is unable to pay its debts. Let me note once again that it is worth making allowances for what kind of rating it is - international or national: with the relatively low “international” level of reliability of Bank B from Fitch, its Russian rating will be very decent - BBB.
An important element of the rating is the forecast of its further changes. A negative outlook does not mean that the rating will definitely be lowered at the next recalculation, but the likelihood of such a change is high. This is not very good, but we need to look at what level the decline will start from. If the bank now has an international rating of BBB-, then even if it goes down one notch, it’s not a big deal. And if now it’s just B, then a further decrease is very unpleasant.
Another parameter that you should definitely pay attention to is the date the rating was issued. The situation in the financial world is changing quickly, so a rating from a year ago can hardly be considered informative.
PS If you have questions about personal finance, investing and banking, ask in the comments. I will try to answer them as detailed and clear as possible.
Content Rating StatisticsClicking on any of these links will take you to a page with a list of the best content, sorted by rating value from highest to lowest. At a given time, the list includes the first 100 topics or albums. The list is rebuilt in real time with each new content rating.
Rating statistics are calculated by periods: for a week, a month, a year and all the time. In this case, the periods are calculated according to the “today minus N days” scheme, for example, rating statistics for a month mean statistics for the last 30 days. By default, weekly statistics are shown.
The list itself consists of the following blocks:
Regardless of the selected period, the list includes the first 100 topics or albums whose number of ratings for this period equals or exceeds the set threshold. You can find out this value by looking at the explanation of the calculation formula weighted rating below the content rating list.
- Select the period for displaying rating statistics.
- Current content position.
- Information about the content (title, author, etc.). For themes, the author's avatar is displayed; for albums, a thumbnail of the last image added to the album is displayed.
- Meaning weighted rating. When you hover your mouse over this number, information about the number of ratings for this content will appear. The number is a link to detailed information about the content.
- The New badge marks content that is new to the Top 10 Topics or Albums list (red badge) or Top 100 Topics or Albums list (blue badge).
- These numbers show the dynamics of changes in the position of content. The current position is compared with the position occupied by the content yesterday. A green value means an improvement in the position, a red value means a deterioration. The number itself means the number of positions by which the content has moved compared to yesterday. The number is also a link to detailed information about the content.
For example, let this threshold value be 3. And consider a topic that was created 3 weeks ago and received only 5 votes, with 3 votes in the first 7 days of existence, and two in the last 3 days. Then, this topic will be included in the lists of the best topics for the following periods: for all time, for the year and for the month. During these periods, the topic received 5 ratings. This topic will not be included in the list of the best topics for the week, since it has received only 2 ratings in the last 7 days.
What is a credit rating of an individual is clear. This is to repay loans received from banking organizations. This indicator is calculated by banks to determine the feasibility of providing a loan to a specific person.
If we scale it up, we get a business credit rating. It will be of interest to both partner companies and investors.
What is a country's credit rating?
The same concept has a much greater information load when applied to a more complex economic organization such as a country. Credit cards reflect the risk of investments in the state infrastructure. Based on this indicator, we can draw conclusions about whether the state will be able to respond to its own Investors, when making decisions on large investments in enterprises or industries, must take into account the current values of the credit rating.
But at the same time, this is essentially a forecast. It does not provide one hundred percent guarantees of return on investment, and therefore cannot be an absolute indicator of reliability. When making investment decisions, the credit rating of countries should be considered in conjunction with other factors that confirm the advisability of such investments.
Who has the authority to determine credit ratings?
The indicators we study can be national And international. The first ones are determined by national ones. In Russia these are “Rus-Rating”, “Expert RA”, “National Rating Agency” and others, in Ukraine - “Credit Rating” and “Standard Rating”. They have authority only within their own country.
Data from international rating companies are much more credible:
- Moody's.
- Standard & Poor's (S&P).
- Fitch.
They were created in the United States at the beginning of the last century, but received worldwide recognition and reached the international level.
These organizations determine international credit ratings of countries, industries, enterprises, banking organizations, issue related forecasts, and also analyze financial markets.
Credit rating designation
Each rating agency has defined its own designation scale. The meaning of the main concept has a letter definition, and intermediate categories on the S&P and Fitch scales are distinguished by the signs “+” and “-”, which in meaning are not much different from the numbers on the Moody's scale.
| Moody's | S&P | Fitch | Decoding the meaning |
| Ahh | AAA | AAA | Excellent credit reliability |
| Aa1 | AA+ | AA+ | High credit reliability |
| Aa2 | AA | AA | |
| Aa3 | AA- | AA- | |
| A1 | A+ | A+ | Average reliability (increasing) |
| A2 | A | A | |
| A3 | A- | A- | |
| Vaa1 | BBB+ | BBB+ | Average reliability (decreasing) |
| Vaa2 | BBB | BBB | |
| Vaa3 | BBB- | BBB- | |
| Ba1 | BB+ | BB+ | Possibility of speculative operations |
| Ba2 | BB | BB | |
| Ba3 | BB- | BB- | |
| IN 1 | B+ | B+ | High level of speculation |
| AT 2 | IN | IN | |
| AT 3 | IN- | IN- | |
| Saa1 | SSS+ | SSS | Excessive risks |
| Saa2 | Super speculative operations | ||
| Saa3 | SSS- | Pre-default state | |
| Sa | SS | ||
| WITH | |||
| C | D | DDD | Default |
| DD | |||
| D |
What is a forecast from a rating agency?
- Positive outlook- means that the rating is likely to increase in the near future.
- Stable- does not foretell changes.
- Negative- likely downgrade of credit rating.
In the case where there is an equal probability of both a decrease and an increase in the indicator, determine developing forecast.
How has the credit rating of Ukraine and Russia changed over the past year?
In 2014-2015, events occur in these countries that provoke a decrease in the indicator in question. And the first consequences are already noticeable.
The credit rating of the Russian Federation was downgraded by Moody's from Baa1 to Baa2 at the end of 2014. In addition, there is a possibility of a further downgrade - the forecast is negative. Standard & Poor's also downgraded from BBB- to BB+ in foreign, and from BBB to BBB- in national currency. At the beginning of 2015, Fitch made a completely predicted decline from BBB to BBB - all with the same negative forecast.
Ukraine, according to international rating agencies, is in a pre-default state. At the beginning of 2015, Fitch assigned it an SS value with a negative trend. Ukraine’s foreign currency credit rating, according to Standard & Poor’s, was downgraded from CCC to CCC- at the end of 2014.
Can rating agencies be trusted?
In times of rampant corruption at all levels, the question arises: “How accurate are the data from rating organizations? Can they be trusted?” Indeed, a “twisted” credit rating of countries can greatly influence the situation in the field of global investment and direct large investment flows in the wrong direction. If the rating data used by the investor side is false, then this calls into question the relevance of the investment and sooner or later will be reflected in the profit.
The above-mentioned rating agencies have worked hard over the years to earn global credibility and trust. Now their job is to provide as truthful and up-to-date information as possible to maintain their status. The assigned ratings cannot be falsified in any way, so they can be used as reliable for market analysis.