HOW FITCH RATING RATES COMPANIES
Fitch rating is a world wide credit rating company that provide opinion on companies and other organizations’s credit rating based on how small economic shift in a country can affect the company’s standing on it’s debts. Fitch Rating also provides ”opinion on the relative ability of an entity to meet financial commitments, such as interest, preferred dividends, repayment of principal, insurance claims or counterparty obligations.” Fitch credit Rating can be used by investors as indicators to know about the company’s stability and liquidity. There are three popular three rating agency. Fitch Rating, Moody Rating and Standard & Poor’s rating.
HOW DOES FITCH RATING RATES COMPANIES
The following are the ways fitch rates companies.
AAA- Reliable and Stable
AA- Quality with a little higher risk
A-Finance can be affected by economic conditions
BBB- Middle class level which is acceptable
BB-Easily prone to changes in the economy
CCC- vulnerable and dependent on current Economic condition
D- Has defaulted before and now in high risk.
AAA to BBB are investment grade and BB to D are speculative grade. The rating investor grade and speculative grade are market conventional terms and ”do not imply any recommendation or endorsement of a specific security for investment purposes. “Investment grade” categories indicate relatively low to moderate credit risk, while ratings in the “speculative” categories either signal a higher level of credit risk or that a default has already occurred, ” says Fitch Rating.
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