- What is credit rating and research?
- Who exposes him?
- Why are they needed?
- Credit rating system
- About Russia put in a word
It is necessary to somehow assess the state of affairs in the state. You can impartially judge the purchasing power or consider a specific option for a particular case and be interested in what is important. For example - the likelihood of debt repayment. And from this point of interest provides a credit rating and research on its establishment.
What is credit rating and research?
Credit ratings refer to the opinions of individual foreign and Russian rating agencies on the financial stability and creditworthiness of the financial sector of individual states within their own boundaries and internationally. In order to establish which value should be assigned, special studies are carried out, the purpose of which is to find out the economic situation in the country, to estimate the amount of the paid debts and the probability of their payment if they are issued at the time of the study. Credibility is a parameter that assesses the likelihood of debt return if you give a loan right now. Moreover, it should be said that rating is practiced not only in relation to individual states, but also to large companies. Therefore, creditworthiness is a concept that applies not only to individual countries, but also to private companies.
Who exposes him?
They are compiled and submitted by individual rating agencies that monitor the situation in the country. They can observe either through mass media and state statistics, or combining them with reports of their representatives. For example, some bureaus interact with a number of users of different companies (through surveys), as the Better Business Bureau does, others try to limit themselves to the largest organizations only.
Why are they needed?
Why are these ratings necessary? The fact is that they provide information to potential investors about the domestic situation and state of affairs. Based on their opinions, many businessmen and companies decide whether to invest their money in this state or organization.
Credit rating system
What credit rating systems exist? They are quite a lot and they are denoted in Latin. In general, there is a fairly large variety of assessment scales that use small letters, pros and cons, but the article will consider only the main “core”:
- AAA rating. Maximum level. It is understood that this country is the borrower with the highest level of creditworthiness. The financial situation is estimated as good and stable for a long time. The state performs its duties on time and is extremely low dependent on external factors of anthropogenic origin. The possible risks are minimal, the probability of default is close to zero.
- AA rating. Very high level of creditworthiness. This category includes states that have a stable economic state for a long time. Such countries also weakly depend on negative changes in the global economy and have a low level of credit risks.
- Rating A. High level of solvency. The economic state of the states in this category is assessed as good at this time. All obligations are fulfilled on time. At the same time, countries have a low dependence on the negative changes that are occurring in the global economy. The level of credit risks is estimated as low.
- BBB rating. Relatively high level of creditworthiness. This rating indicates that the economic situation of the country is quite good. It can fulfill its obligations on time and in full. At the same time, the state is moderately dependent on negative changes in the global market. The likelihood of credit risk is moderate.
- BB rating. Satisfactory level of creditworthiness. These letters in the ranking indicate the states whose economic situation can be assessed as acceptable. They fully and timely fulfill their commitments and moderately depend on negative changes in the world economic market, but with negative changes in the global economy there may be delays. Credit risks are assessed as acceptable.
- Rating V. Low level of solvency. The economic situation of this category of states is characterized as unstable, and the possibilities for timely repayment of debts largely depend on the international situation. Credit risks in such countries are above average.
- CCC rating. Low creditworthiness. These include the state with an unsatisfactory economic situation. The ability to fulfill their obligations depends very much on changes in the macroeconomic environment. The level of credit risk is considered high. There is also a significant likelihood that the commitments will not be fully met or out of time.
- SS rating. Very low level of creditworthiness. The financial condition of the countries that are listed in this category is unsatisfactory. The possibilities for their fulfillment of their obligations are determined in the most significant way by changes in the external economic environment, and credit risks are very great. The probability of announcement of default is very high.
- Rating C. Unsatisfactory level of creditworthiness. The economies of countries from this category are in extremely poor condition and have extremely high risks. As a rule, countries that have a pre-default condition are entered here.
- Rating D. Default. Here come the countries that can not engage in servicing their obligations and, most likely, there will be launched a bankruptcy procedure. It is necessary to distinguish these two indicators, because a default is simply a refusal to pay its debts, in theory it can be declared by the state, which can pay everything.
About Russia put in a word
Since each agency has its own rating scale, there is no equal opinion. But in general, the rating of Russia is BBB or BB. Not the best option, but not the most hopeless. Thus, the BBB rating indicates the presence of certain problems. But even in the expert environment there is no unity. Thus, Russia's rating is now at such a level that it can be upgraded if the country is focused on the development of science and the introduction of new technologies. And then the BBB rating will be upgraded to A. If this is not done, then we will expect a gradual decline.
As you can see, such seemingly simple letters can tell a lot. Behind them is the work of many people who collect and analyze the necessary information. And let's hope that the BBB rating assigned to Russia by many agencies at the moment will change to the best.