Fitch Ratings Scale

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====== Fitch Ratings Scale ======

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Fitch Ratings Inc. in an international [[en:credit-rating-agency|credit rating agency]].

Together with [[en:moodys|Moody']]s and Standard & Poors, Fitch is one of the largest credit rating agencies in the world. 

Fitch Rating was founded in 1913.

Credit rating agencies make risk assessments of financial instruments like:

  * Government bonds
  * Big corporations bonds
  * Preferred stocks
  * Mortgage backed instruments

===== Scale =====


Credit Ratings give an asessment to financial instruments. For example, an "investment grade" asset can have the following ratings:

  - AAA The highest rating. 
  - AA 
  - A 
  - BBB  

Fitch uses the symbols + and - to make smaller adjustment to it's ratings. For example, AA+ is better than AA. 

A credit rating is an assessment of the financial capacity of an entity (corporation or government institution) to pay it's financial obligations. Common stocks do not constitute debt: they are not subject of credit ratings. Credit ratings apply to debt securities like bonds. 

Credit ratings can be applied also to:
  * Corporations
  * National governments
  * Financial institutions
  * Insurance companies
  * Municipalities

It is considered that an institution with a better rating (AAA) has a lower default risk than an institution with a worse rating (BBB). 

Fitch Rating Scale:

**Investment Grade**:
  * **AAA**: the best grade. This grade is given to stable and reliable companies. As of 2018, in US only Microsoft and Johnson & Johnson are rated AAA
  * **AA**: these are quality companies that have very strong capacity to meet it's financial obligations but a little more riskier that AA companies. 
  * **A**: Strong capacity to meet it's obligations. This capacity may be more vulnerable to changes in economic conditions.
  * **BBB**: these are medium class companies. There is a low expectation of interrupted payments, but changes in circumstances are more likely to impact it's capacity. 

** Non-investment grade **
The probability that the company will repay it's debt is deemed to be speculative. 

  * **BB**: company's payment capacity is prone to changes in the economy.
  * **B**: the financial situation of the company varies noticeably. 
  * **CCC**: the current situation of the company is vulnerable. The company depends on favorable conditions to meet it's commitments.
  * **CC**:  very vulnerable
  * **C**: the company or issuer can be in bankrupcy, but it's still paying it's obligations.
  * **D**: the company has defaulted, and Fitch believes it will default most of the future obligations.
  * **NR**; Not Rated

Fitch ratings for selected countries:

{{:es:fitch-rating.png?direct&300|}}

  * Light blue represent countries with good ratings
  * Violet represents countries with ratings near to BBB
  * Red represents countries with bad credit ratings (CCC)




===== See also =====

[[en:credit-rating-agency|Credit rating agencies]]
[[https://www.fitchratings.com|Official Website]]
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