Fitch publishes a variety of rating opinions. The most common of these are credit ratings, but Fitch also publishes ratings, scores and other relative measures of financial or operational strength. For example, Fitch Ratings also provides specialized ratings of servicers of residential and commercial mortgages, asset managers and managed funds. Additionally, Fitch publishes quantitatively-based ratings, such as Q-IFS ratings, that are point-in-time measures of an insurance company's standalone financial strength based solely on statistical models.
Publication and maintenance of all ratings is subject to an information threshold.
Entities or issues carrying the same rating are of similar but not necessarily identical quality since the ratings are relative measures of risk and ratings categories may not fully reflect small differences in the degrees of risk.
Credit Ratings
Fitch's credit ratings provide an 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. Credit ratings are used by investors as indications of the likelihood of receiving their money back in accordance with the terms on which they invested. Fitch's credit ratings cover the global spectrum of corporate, sovereign (including supranational and sub-national), financial, bank, insurance, municipal and other public finance entities and the securities or other obligations they issue, as well as structured finance securities backed by receivables or other financial assets.
The use of credit ratings defines their function: "investment grade" ratings (International Long-term, 'AAA' to 'BBB-'; Short-term, 'F1' to 'F3' ) indicate relatively low to moderate credit risk, while those in the "speculative" or "non investment grade" categories (International Long-term, 'BB+' to 'D'; Short-term, 'B' to 'D') either signal a higher level of credit risk or that a default has already occurred. Credit ratings express risk in relative rank order, which is to say they are ordinal measures of credit risk and are not predictive of a specific frequency of default or loss.
Depending on their application, credit ratings address benchmark measures of probability of default as well relative expectations of loss given default. For example, issuers are typically assigned Issuer Default Ratings that are relative measures of default probability. Similarly, short-term credit ratings give primary consideration to the likelihood that obligations will be met on a timely basis. Securities, however, are rated taking into consideration probability of default and loss given default. As a result, for entities such as corporations security ratings may be rated higher, lower or the same as the issuer rating to reflect expectations of the security's relative recovery prospects, as well as differences in ability and willingness to pay. While recovery analysis plays an important role throughout the ratings scale, it becomes a more critical consideration for below investment-grade securities and obligations, particularly at the lower end of the non-investment-grade ratings scale where Fitch often publishes actual Recovery Ratings, that are complementary to the credit ratings.
Structured finance ratings typically are assigned to each individual security or tranche in a transaction, and not to an issuer. Each structured finance tranche is rated on the basis of various stress scenarios in combination with its relative seniority, prioritization of cash flows and other structural mechanisms.
International Credit Ratings
International credit ratings assess the capacity to meet foreign currency or local currency commitments. Both "foreign currency" and "local currency" ratings are internationally comparable assessments. The local currency rating measures the likelihood of repayment in the currency of the jurisdiction in which the issuer is domiciled and hence does not take account of the possibility that it will not be possible to convert local currency into foreign currency or make transfers between sovereign jurisdictions.
National Credit Ratings
In certain markets, Fitch provides National Ratings, which are an assessment of credit quality relative to the rating of the "best" credit risk in a country. This "best" risk will normally, although not always, be assigned to all financial commitments issued or guaranteed by the sovereign state. For particular countries, Fitch Ratings also assigns National Insurance Financial Strength Ratings, using a scale unique to such ratings. National Ratings are not intended to be internationally comparable and are denoted by a special identifier for the country concerned.
Country Ceiling Ratings
Country ceiling ratings are assigned internationally and reflect Fitch's judgment regarding the risk of capital and exchange controls being imposed by the sovereign authorities that would prevent or materially impede the private sector's ability to convert local currency into foreign currency and transfer to non-resident creditors - transfer and convertibility (T&C) risk. Given the close correlation between sovereign credit and T&C risks, where the country ceiling is above the sovereiogn rating, ratings at the country ceiling may exhibit a greater degree of volatility than would normally be associated with ratings at that level.
Other Ratings
Fitch Ratings also provides Individual and Support ratings of banks, which opine on the likelihood that a bank will get into difficulties, and in that event, whether it will indeed receive external support. In addition, Fitch Ratings provides specialized ratings of servicers of residential and commercial mortgages and other asset types. Asset manager ratings opine on the relative operational and financial capabilities of asset managers, trustees and others. Managed fund credit and/or volatility ratings are assigned to bond funds, certain fixed-income indices and collateralized mortgage obligations. Many of these ratings are offered internationally and in some cases on a national basis applying appropriate ratings modifiers and identifiers.
Disclaimers
Ratings are based upon information obtained directly from issuers, other obligors, underwriters, their experts, and other sources Fitch Ratings believes to be reliable. Fitch Ratings does not audit or verify the truth or accuracy of such information, and has undertaken no obligation to so audit or verify such information or to perform any other kind of investigative diligence into the accuracy or completeness of such information. If any such information should turn out to contain misrepresentations or to be otherwise misleading, the rating associated with that information may not be appropriate and Fitch Ratings assumes no responsibility for this risk. The assignment of a rating to any issuer or any security should not be viewed as a guarantee of the accuracy, completeness, or timeliness of the information relied on in connection with the rating or the results obtained from the use of such information.
Ratings do not constitute recommendations to buy, sell, or hold any security, nor do they comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of any payments of any security.
Fitch's credit ratings do not directly address any risk other than credit risk. In particular, ratings do not deal with the risk of a market value loss due to changes in interest rates and other market considerations.
Ratings are opinions reflecting the ability of an entity or a securities issue to meet financial commitments such as interest, preferred dividends, and repayment of principal, in accordance with their terms. Ratings are not themselves facts, and therefore cannot be described as being 'accurate' or 'inaccurate.'
Fitch Ratings does not have a fiduciary relationship with any issuer, subscriber or any other individual. Nothing is intended to or should be construed as creating a fiduciary relationship between Fitch Ratings and any issuer or between Fitch Ratings and any user of its ratings.
Ratings may be changed, qualified, suspended, placed on Rating Watch or withdrawn as a result of changes in, additions to, accuracy of, unavailability of or inadequacy of information or for any reason Fitch Ratings deems sufficient.
Fitch Ratings does not provide to any party any financial advice, or legal auditing, accounting, appraisal, valuation or actuarial services. A rating should not be viewed as a replacement for such advice or services.
The assignment of a rating by Fitch Ratings shall not constitute consent by Fitch Ratings to use its name as an expert in connection with any registration statement, offering document or other filings under any relevant securities laws.
Affirmed
The rating has been reviewed and no change has been deemed necessary.
Change
The rating has been changed or modified due to a revision in methodology. (Note: this value is only used for Bank Support Rating codes.)
Confirmed
Due to an external request or change in terms, the rating has been reviewed and no change has been deemed necessary.
Downgrade
The rating has been lowered in the scale.
Expected Rating
A preliminary rating, usually contingent upon the receipt of final documents, has been assigned.
New Rating
A new rating has been assigned.
Paid In Full
This tranche has reached maturity, regardless of whether it was amortized or called early. As the issue no longer exists, it is therefore no longer rated.
Rating Watch On
The issue or issuer has been placed on active Rating Watch status.
Rating Watch Review
The rating has been reviewed and the Rating Watch status has been extended for up to six additional months. (Note: this value is only used for Structured Finance transactions.)
Revision IDR
The issuer Long- or Short-Term Credit Rating has been changed to an Issuer Default Rating type. Does not necessarily denote an upgrade or downgrade.
Revision Outlook
The Rating Outlook status has been changed.
Revision Rating
The rating has been modified. This is usually as a result of the introduction of a new scale, rather than a change in terms of credit quality.
Upgrade
The rating has been raised in the scale.
Withdrawn
The rating has been removed and is no longer maintained by Fitch.