credit rating
n.
A number calculated by examining a person’s assets, liabilities, and financial history that tells a lender how likely that person is to pay back a loan.

The Essential Law Dictionary. — Sphinx Publishing, An imprint of Sourcebooks, Inc. . 2008.


credit rating
The rating of corporate securities by credit rating agencies (rating agency) such as Standard & Poor's and Moody's according to the quality of the borrower and its capacity to pay interest and repay the principal on the bonds. Ratings range from AAA (extremely strong capacity to pay interest and repay principal) to D (securities in default).
+ A credit rating is an independent opinion on a company's ability to pay its debts on a timely basis. A rating may be assigned to a debtor in respect of either:
• Its general creditworthiness.
• A specific debt obligation, such as a bond issue, euro medium-term note programme, euro commercial paper programme, derivatives or bank loan.
Ratings, which may be long or short-term, are issued by independent rating agencies. In reaching their credit judgments, rating agencies assess the relevant factors relating to:
• The debtor.
• The debtor's industry.
• The debtor's geographic region.
Specific debt ratings take account of the terms and conditions relating to the debt, the creditworthiness of any guarantor or insurer of the debt and any other credit enhancement. Such ratings are often obtained for securitised or asset-backed bond issues to provide independent assurance of the issue's creditworthiness.
+ credit rating
USA
The rating given to a specific debt issue, bank loan or borrower by a credit rating agency. These ratings are based on the creditworthiness of the issuer of the debt or borrower of the loan. Rating scales vary; the most popular scale uses (in order of increasing risk) ratings of AAA, AA, A, BBB, BB, B, CCC, CC, C, with the additional rating D for debt already in arrears. Government bonds and bonds issued by government sponsored enterprises are often considered to be in a zero-risk category above AAA, and categories like AA and A may sometimes be split into finer subdivisions like "AA-" or "AA+". Bonds rated BBB- and higher are called investment grade bonds. Bonds rated lower than investment grade on their date of issue are called speculative grade bonds, derisively referred to as junk bonds.
Similarly, loans and borrowers rated BBB- and higher are called investment grade loans and borrowers, respectively. Loans rated lower than investment grade on their date of issue are called leveraged loans.
Related links
credit rating

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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