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What is a credit rating agency?

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Where a credit bureau focus on consumer credit, a credit rating agency (CRA) is an independent company that evaluates and quantifies the credit risk of banks, nonbank corporations and local and national entities as well as their publicly traded debt by benchmarking across industries and countries and rating the probability of default of the entities and issues.  Credit rating services assign both short-term and long-term issuer and issue ratings for safety of principal, interest or dividends.  Standard & Poor’s (S&P’s), Moody’s Investor Service and Fitch Ratings are the three major global credit rating services.

Credit rating agencies – not credit bureaus – commonly rate loan and lease originators as well as the asset-backed securities that they originate and have become more prominent in the risk review process as funding of commercial real estate has shifted towards securitization.  External credit ratings are also standard for large project financings, in which leasing typically plays a major role.

Investment-Grade Ratings of Credit Rating Agencies
Credit Agency
Fitch IBCA AAA AA+ AA AA- A+ A A- BBB+ BBB BBB-
Moody's Aaa Aa1 Aa2 Aa3 A1 A2 A3 Baa1 Baa2 Baa3
Standard & Poor's AAA AA+ AA AA- A+ A A- BBB+ BBB BBB-
Speculative-Grade Ratings of Credit Rating Agencies
Credit Agency
Fitch IBCA BB+ BB BB- B+ B B- CCC+ CCC CCC- CC C D
Moody's Ba1 Ba2 Ba3 B1 B2 B3 Caa1 Caa2 Caa3 Ca C
Standard & Poor's BB+ BB BB- B+ B B- CCC+ CCC CCC- CC C D

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