88. What do you know about Standard and Poors (s&p) credit rating agency?

Standard and Poors (S&P) is an American financial services company.  It is a division of McGraw Hill Financial that publishes financial research and analysis on stocks and bonds. S&P is known for its stock market indices such as the U.S.-based S&P 500. S&P is considered one of the Big Three credit-rating agencies, which also include Moody's Investor Service and Fitch Ratings.

Standard & Poor's has been providing financial market intelligence to decision-makers for more than 150 years. Standard & Poor's was acquired by The McGraw-Hill Companies in 1966.

Standard & Poor's, which has offices in 23 countries, is known to investors worldwide for its wide variety of investable and benchmark indices, and the large number of credit ratings it issues. 

As a credit-rating agency, the company issues credit ratings for the debt of public and private companies, and other public borrowers such as governments and governmental entities. It is one of several CRAs that have been designated a nationally recognized statistical rating organization by the U.S. Securities and Exchange Commission. S&P issues both short-term and long-term credit ratings.

89. What do you know about Moody’s credit rating agency?

Moody's Investors Service, often referred to as Moody's, is the bond credit rating business of Moody's Corporation, representing the company's traditional line of business and its historical name. Moody's Investors Service provides international financial research on bonds issued by commercial and government entities and, with Standard & Poor's andFitch Group, is considered one of the Big Three credit rating agencies.

Moody's was founded by John Moody in 1909 to produce manuals of statistics related to stocks and bonds and bond ratings.

According to Moody's, the purpose of its ratings is to "provide investors with a simple system of gradation by which future relative creditworthiness of securities may be gauged". To each of its ratings from Aa through Caa, Moody's appends numerical modifiers 1, 2 and 3; the lower the number, the higher-end the rating. Aaa, Ca and C are not modified this way. As Moody's explains, its ratings are "not to be construed as recommendations", nor are they intended to be a sole basis for investment decisions. In addition, its ratings don’t speak to market price, although market conditions may impact credit risk.

Aaa - Rated as the highest quality and lowest credit risk

Aaa, Aa1, Aa2, Aa3, A1 – Prime 1 (Best ability to repay short-term debt)

A2, A3 - Rated as upper-medium grade and low credit risk

Baa1, Baa2 - Prime-2/Prime-3 (High ability or acceptable ability to repay short term debt)

Baa3 - Prime-3 (Acceptable ability to repay short term debt)

Ba1-C – Not Prime.

Credit rating agencies also play an important role in the laws and regulations of the United States and several other countries, such as those of the European Union. In the United States their credit ratings are used in regulation by the U.S. Securities and Exchange Commission as Nationally Recognized Statistical Rating Organizations (NRSROs) for a variety of regulatory purposes.^[3] Among the effects of regulatory use was to enable lower-rated companies to sell bond debt for the first time; their lower ratings merely distinguished them from higher-rated companies, rather than excluding them altogether, as had been the case.^[5] However, another aspect of mechanical use of ratings by regulatory agencies has been to reinforce "pro-cyclical" and "cliff effects" of downgrades. In October 2010, the Financial Stability Board (FSB) created a set of "principles to reduce reliance" on credit ranges agencies in the laws, regulations and market practices of G-20 member countries.^[4] Since the early 1990s, the SEC has also used NRSRO ratings in measuring the commercial paper held by money market funds.