What are Fitch Ratings?
Fitch Ratings is a global credit rating agency with offices in New York and London. Investors use business ratings to identify which investments will not default and offer a good return. Fitch grades companies based on their debt and vulnerability to systemic changes like interest rates.
Understand Fitch Ratings
The world’s top three credit rating companies include Fitch. Fitch uses a letter system like other rating organizations.
Fitch rates firms as investment grade or non-investment grade. Investment-grade ratings:
- AAA: high-quality, established firms with dependable cash flows.
- A.A.: high quality and little default risk.
- Default risk is modest, but commercial or economic variables may increase vulnerability.
- BBB: modest default risk; companies may face financial or commercial challenges.
Non-investment grade ratings:
- B.B.: While financially flexible, B.B. is more vulnerable to default risk and unfavorable business or economic situations.
- B: declining finances; very speculative.
- CCC: Actual risk of default
- CC: Strong chance of default
- The default or default-like procedure has started.
- R.D.: The issuer failed to make a payment.
- D: Defaulted
Fitch and Sovereign Nations
In Fitch’s sovereign credit ratings, nations are assessed on their capacity to satisfy their debt commitments. Investors can use sovereign credit ratings to determine a country’s risk. Countries will ask Fitch and other credit rating firms to evaluate their economic, political, and financial conditions to derive a representative rating. Developing nations need the highest sovereign credit rating to secure international bond market funding.
Fitch gave the U.S. the highest AAA long-term sovereign credit rating in 2018. The lowest was Brazil at B.B.-.In 2023, Fitch downgraded the U.S. to AA+, a rating between AAA and A.A. that indicates a modest decrease in confidence that it can pay its obligations. However, the agency still considers it a high-quality investment with a low danger of default.
Country ratings affect worldwide investor sentiment; therefore, the U.S. downgrading to AA+ is significant.
Fitch Company and Other Ratings
Fitch Ratings examines enterprises, local governments and agencies, and financial institutions for creditworthiness. The agency rated two Jacksonville, Florida, special revenue bonds with an A.A. investment grade. On its two $290 million issuances, the municipality has a low risk and low anticipation of default. The bonds repay previous bonds and support city capital equipment and renovations.
Financial institution-level Fitch rated London-based National Westminster Bank mortgage-covered bonds AAA with a stable outlook. Fitch’s highest rating indicates trust in the bank’s bonds.
What are Fitch Ratings?
Fitch ratings assess a nation’s or company’s capacity to repay debts.
Fitch Rating A+—What Does It Mean?
Businesses and countries with an A+ rating are less likely to default but more susceptible to economic variables. The plus symbol indicates that the entity’s credit rating is more excellent than those with an A rating but not enough to elevate to A.A.
How Are Moody’s and Fitch Rated?
Credit rating firms Moody’s and Fitch evaluate a company’s creditworthiness. These ratings assist investors in choosing assets. To help foreign investors in choosing countries, both organizations rate sovereign credit.
Bottom Line
Fitch Ratings evaluates organizations, businesses, and the nation’s creditworthiness. The agency has advised investors internationally for over 100 years.
Conclusion
- Credit rating agency Fitch Ratings assesses investment viability and default risk.
- The top three credit rating agencies worldwide are Fitch, Moody’s, and Standard & Poor’s.
- Fitch rates companies by letter: AAA is high-quality with predictable cash flows, whereas D has defaulted.
