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Debt Counseling Assistance :: Moody's Credit Rating
Moody's Credit Rating:
An Overview of Moody's and their Credit Rating System
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The Moody's credit rating system covers predominantly commercial and government organizations. Essentially, instead of researching the credit histories of individual consumers, Moody's focuses on businesses.
Moody's ratings cover three major types of lending - long-term obligation ratings, short-term taxable ratings and short-term tax-exempt ratings. To learn more about each one and how the Moody's credit rating system works, keep reading.
Long-Term Obligation Ratings
These are Moody's ratings for evaluating the credit risk of any fixed-income obligations that have a maturity period of over one year. Their ratings reflect the prospect of default and the chances for financial loss on the part of the lender.
Their long-term ratings fall into three grades - investment grade, speculative grade and special grade. Investment grade typically covers those who have been deemed to be a moderate to excellent credit risk. The lowest rating in this grade is a Baa3 and the highest is a Aaa.
The speculative grade typically covers high risk loans, those who range from the lowest rated risks with little to no chance of recovery to those with substantial credit risk. The lowest rating in this grade is a C and the highest is a Ba1.
The special grade covers special cases such as; WR, withdrawn rating; NR, not rated; and P, provisional.
Short-Term Taxable Ratings
This system covers taxable securities and evaluates the borrower's capability of repaying a loan in less than one year. This system ranges from a low of NP (Not Prime) to a high of P1, which indicates an excellent ability to repay short-term loans and debt.
Short-Term Tax-Exempt Ratings
This category covers short-term municipal bonds and uses the same rating system as the P1 to P3 or NP system that the short-term taxable ratings system uses.
To find out more about the Moody's Credit Rating system, you can visit their website at http://moodys.com or call the company at (212) 553-1653.
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