S&P Global Ratings

S&P Global Ratings is a credit-rating agency that publishes opinions about the relative creditworthiness of issuers and specific financial obligations. It uses familiar long-term symbols such as AAA, BBB-, BB+, and D. These ratings are analytical opinions, not guarantees of payment, measures of every investment risk, or recommendations to buy or sell.

Key Takeaways

• S&P Global Ratings is the ratings business. It is distinct from S&P Dow Jones Indices, which administers indices such as the S&P 500.
• The common long-term scale runs from AAA through AA, A, BBB, BB, B, CCC, CC, C, and D categories.
• Plus and minus modifiers indicate relative standing within many categories.
• BBB- is the commonly used lowest investment-grade notch; BB+ is the highest speculative-grade notch.
• The issuer, obligation, scale, rating date, outlook, and CreditWatch status all matter when interpreting a symbol.

Ratings Business vs. Index Business

The historical name “Standard & Poor’s” is often shortened to “S&P,” but that abbreviation can refer to different activities within S&P Global.

• S&P Global Ratings assigns credit ratings and publishes credit research.
• S&P Dow Jones Indices develops and administers market indices.

An S&P 500 index level is not produced by the credit-rating process, and a corporate credit rating is not an index score. The former page’s index formulas and equity-index examples conflated these separate functions.

How to Read the S&P Long-Term Scale

The category descriptions must be read from the current agency definitions. The scale ranks relative creditworthiness; it does not convert directly into a fixed default probability or expected return.

Plus and Minus Modifiers

Modifiers show relative standing within a category. For example:

1BBB+ ranks above BBB, which ranks above BBB-

BBB- is one notch above BB+ across the common investment-grade boundary. Modifiers are not used for every category or every specialized scale, so users should verify the exact rating type.

Issuer Ratings and Issue Ratings

An issuer credit rating addresses an entity’s general capacity and willingness to meet financial commitments under the agency’s definitions. An issue credit rating addresses a specific obligation.

The two can differ because an issue may be secured, guaranteed, structurally senior, contractually subordinated, or exposed to different recovery prospects. A headline issuer rating should not be copied onto every bond from that issuer.

Worked Example: Issuer and Issue Ratings

Assume a company has an S&P issuer credit rating of BBB, a senior secured bond rated BBB+, and a subordinated note rated BBB-.

• The secured bond may sit above the issuer rating because of its security and recovery characteristics.
• The subordinated note sits at the common investment-grade boundary.
• A one-notch downgrade of the issuer does not prove that both issues will move identically; the agency applies the relevant criteria to each opinion.

If the subordinated note moves to BB+ and is removed from an investment-grade index at month-end, the index result follows that provider’s rating aggregation and rebalancing rules. It is not an automatic rule for every fund or contract.

Outlooks, CreditWatch, and Rating Actions

A rating outlook provides directional context under the agency’s definitions. CreditWatch highlights a rating under focused review following events or developments that may affect it.

Neither label guarantees an upgrade or downgrade. Record the placement date, stated factors, affected obligations, and latest rating action. A market price can move before, during, or after the formal review.

How the Ratings Are Used

Market participants may use S&P ratings to compare relative credit risk, monitor mandate limits, classify collateral, or apply index rules. A portfolio may combine S&P with Moody’s and Fitch through a documented hierarchy.

A rating does not determine a bond’s yield. Two bonds with the same rating can trade differently because of duration, liquidity, call provisions, currency, tax status, seniority, covenants, sector, and market expectations.

Limitations and Conflicts to Consider

• Limited scope: Ratings focus on credit risk and do not directly measure interest-rate, market-price, liquidity, currency, or suitability risk.
• Change risk: A rating is current only as of its effective date and can be upgraded, downgraded, suspended, or withdrawn.
• Methodology risk: Criteria and assumptions differ across sectors and can evolve.
• Business-model conflict: S&P Global Ratings states that it generally uses an issuer-pays model. Users should review disclosures and understand who requested and paid for a rating.
• Split-rating risk: Other agencies may disagree, and the classification outcome depends on the user’s rule.
• Data-matching risk: Similar issuer names, debt programs, and maturities can lead users to attach a rating to the wrong obligation.

How to Verify an S&P Rating

1. Search the current agency record by legal issuer, CUSIP, ISIN, or other specific identifier.
2. Confirm whether the opinion is issuer-level or issue-specific.
3. Identify the scale, currency, seniority, and rated obligation.
4. Read the latest rating action, rationale, outlook, and CreditWatch status.
5. Compare other agency opinions and document the split-rating method.
6. Supplement the opinion with filings, offering documents, covenants, financial analysis, spreads, and recovery scenarios.

Public Source Checks

S&P Global explains its credit-rating purpose, process, business model, and limitations and publishes a guide to credit-rating essentials. The SEC Office of Credit Ratings oversees registered NRSROs, and the SEC’s Investor.gov bulletin describes how investors should use ratings as one input rather than a substitute for analysis.

This page is educational only. It does not reproduce a current rating, assign a credit opinion, or recommend any issuer, bond, or index product.

Related Terms

• Bond Rating: A comparison of major rating scales and grade boundaries.
• Credit Rating Agency: The broader term for an organization that assigns credit opinions.
• Moody’s Ratings: An agency using categories such as Aaa, Baa3, and Ba1.
• Fitch Ratings: An agency with a broadly similar letter and modifier scale.
• Investment-Grade Bond: Debt at or above the common BBB- S&P boundary.
• Credit Downgrade: A reduction in a rating opinion.

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