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What is Moody's credit rating?

saw the article today that Morgan Stanley's rating is falling. But what does that actually mean? what does the moody's rating tell you?

May 23, 2012 by Ephraim from Erie, PA in  |  Flag
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Moody's is a company that investigates and rates the credit worthiness of companies, similar to services provided by Standard and Poor's and Fitch. It analyzes the company's financials and gives it a grade based on how likely the company is to pay it's obligations. They have 21 levels with Aaa being the best/safest rating all the way down to the worst level being C. The top 10 levels are considered "investment grade" or safe enough that conservative investors like Pension Funds can invest in Baa3 or better and resonably expect the company to be solvent. Below that is considered "speculative", in bonds it is sometimes called "junk bonds". A unit of Morgan Stanley, their fixed-income trading unit, is now rated Baa2 which is still levels above "junk" status, but 3 levels lower than they were. Essentially, it will just make it a little harder and more expensive for that unit to do business for a while. See? Easy stuff!

Comment   |  Flag   |  May 24, 2012 from Columbus, GA

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