Home Methodology Rating scales and symbols Symbols of the long-term rating scale - Rating of Sovereign
Symbols of the long-term rating scale - Rating of Sovereign
Thursday, 20 September 2018

Long term rating scale

Category

Rating

Description

 

AAA

 

AAA

The highest rating. An entity or an issue of securities or a financial obligation rated AAA demonstrates the maximum creditworthiness and the minimum sensitivity to unfavorable changes in business, financial and economic conditions, either domestic or international, and other external factors.

 

AA

AA+

High creditworthiness as compared to other rated entities or issues of securities or financial obligations. Low sensitivity to unfavorable changes in business, financial and economic conditions, either domestic or international, and other external factors. In   Europe’s opinion, the rating is insignificantly lower than that of entities rated AAA.

AA

AA-

 

A

A+

Moderately high creditworthiness as compared to other rated entities or issues of securities or financial obligations. Certain sensitivity to unfavorable changes in business, financial and economic conditions, either domestic or international, and other external factors.

A

A-

 

BBB

BBB+

Moderate creditworthiness as compared to other rated entities or issues of securities or financial obligations. Higher sensitivity to unfavorable changes in business, financial and economic conditions, either domestic or international, and other external factors.

BBB

BBB-

 

BB

BB+

Moderately low creditworthiness as compared to other rated entities or issues of securities or financial obligations. The creditworthiness is sustainable in the short- term, but there is high sensitivity to unfavorable changes in business, financial and economic conditions, either domestic or international, and other external factors.

BB

BB-

 

B

B+

Low creditworthiness as compared to other rated entities or issues of securities or financial obligations. The rated entity is able to perform debt obligations when due and in full, but it is highly vulnerable to unfavorable business, financial and economic conditions, either domestic or international, and other external factors.

B

B-

 

CCC

 

CCC

Very low creditworthiness as compared to other rated entities or issues of securities or financial obligations. The rated entity may potentially fail to perform its debt obligations in the short term. Timely performance of debt obligations largely depends on favorable business, financial and economic conditions, either domestic or international, and other external factors.

 

 

СС

 

 

CC

Very low creditworthiness as compared to other rated entities or issues of securities or financial obligations. There is an elevated likelihood of failure by the rated entity to perform its debt obligations in the short term. Timely performance of debt obligations depends on favorable business, financial and economic conditions, either domestic or international, and other external factors, as well as on relations with creditors.

 

С

 

C

Very low creditworthiness as compared to other rated entities or issues of securities or financial obligations. There is a high likelihood of failure by the rated entity to perform its debt obligations in the short term. Timely performance of debt obligations is extremely unlikely without favorable attitude of creditors.

D

D

A rated entity or a financial obligation is in default.

Short term rating scale

Category

Description

S1+

A rated entity has the maximum creditworthiness with respect to short-term (less than a year) liabilities, and its access to liquidity and short-time funding demonstrates the minimum sensitivity to unfavorable changes in the financial and economic conditions (including those at the international level) and other factors.

S1

A rated entity has a high creditworthiness with respect to short-term (less than a year) liabilities, and its access to liquidity and short-time funding demonstrates a weak sensitivity to unfavorable changes in the financial and economic conditions (including those at the international level) and other factors.

S2

A rated entity has a moderately high creditworthiness with respect to short-term (less than a year) liabilities, and its access to liquidity and short-time funding may be sensitive to unfavorable changes in the financial and economic conditions (including those at the international level) and other factors.

S3

A rated entity has a moderate creditworthiness with respect to short-term (less than a year) liabilities, and its access to liquidity and short-time funding is sensitive to unfavorable changes in the financial and economic conditions (including those at the international level) and other factors.

B

A rated entity has a moderately low creditworthiness with respect to short-term (less than a year) liabilities, and its access to liquidity and short-time funding is exposed to unfavorable changes in the financial and economic conditions (including those at the international level) and other factors.

C

A rated entity has a very low creditworthiness with respect to short-term (less than a year) liabilities; its liabilities depend heavily on the access to liquidity and short-time funding and favorable financial and economic conditions (including the support from international lenders) and other factors.

D

A rated entity (or financial liability) is in default.

Default definition

ACRA Europe defines sovereign default as the occurrence of one or a combination of the following events4:

  • Failure to service a coupon or principal on the sovereign’s bond or loan on the specified due date or beyond a grace period, if granted;
  • Missed coupon or principal of a security benefitting from unequivocal, irrevocable, and unconditional guarantees provided by the sovereign;
  • Failure to service other debt owed to private creditors, excluding private-sector loans or bonds;
  • Any sovereign-initiated material changes to the original terms of the contract, for instance an extension of maturities, reduced principal payment, coupon or interest, a change in currency denomination, a change from cash pay to pay-in-kind or other forms of non-cash payment and effective subordination.

If a sovereign announces that it will restructure debt, ACRA Europe places the rating of that sovereign at the C category level indicating very high probability of default. The Agency will keep it in this category until the restructuring process is completed. Upon closure of the exchange offer and completion of the exchange, i.e. when the minimum threshold for participation has been met, ACRA Europe places the sovereign in the D category if the overwhelming majority of sovereign debt is to be re-scheduled. If only a subset of debt is restructured, then the sovereign is placed in the SD category.