HOME Investor Relations Rating Scales Explained - Credit Rating - Financial Information
The credit rating of corporate bonds is classified into 10 scales from AAA to D, depending on the company’s capacity to service its debt of principal and interest. Scales from AAA to BBB are investment grade ratings awarded to companies with strong debt service capability, while those from BB to C refer to speculative grade ratings given to those that are highly vulnerable to changes in circumstances.
Korean Rating Scale
| AAA | Extremely strong capacity to repay principal and interest |
|---|---|
| AA | Very strong capacity to repay principal and interest but slightly weaker than AAA-rated bonds |
| A | Strong capacity to repay principal and interest, but somewhat susceptible to adverse economic conditions and change in circumstances |
| BBB | Adequate capacity to repay principal and interest, but more susceptible to adverse economic conditions and change in circumstances |
| BB | Inadequate capacity to repay principal or interest, and vulnerable to non-payment of interest during economic slump |
| CCC | Vulnerable to non-payment of principal or interest and highly speculative with high risk of default |
| CC | Highly vulnerable |
| C | Default imminent with no capacity to repay principal or interest |
| D | In default |
Global Rating Scale
| Definition | S&P | Moody’s |
|---|---|---|
| Obligations are judged to be of the highest quality, with minimal risk. | AAA | Aaa |
| Obligations are judged to be of high quality and are subject to very low credit risk. | AA+, AA, AA- | Aa1, Aa2, Aa3 |
| Obligations are considered upper-medium-grade and are subject to low credit risk. | A+, A, A- | A1, A2, A3 |
| Obligations are subject to moderate credit risk. They are considered medium-grade and as such may possess speculative characteristics. | BBB+, BBB, BBB- | Baa1, Baa2, Baa3 |
| Obligations are judged to have speculative elements and are subject to substantial credit risk. | BB+,BB, BB- | Ba1, Ba2, Ba3 |
| Obligations are considered speculative and are subject to high credit risk. | B+, B, B- | B1, B2, B3 |
| Obligations are judged to be of poor standing, very near default or in default. | CCC or lower | Caa or lower |