You often hear Moody’s has downgraded the bank or financial default of a country? Rank reduced to AA-, BB +, or a AAA. Well how moody can give a rating to the financial institution? And why do they have the authority rank? These reviews can represent from moody’s understanding of the regulation to rank the state banks.
What is Moody’s
According to wikipedia, Moody’s Corporation (NYSE: MCO) is the parent company of Moody’s Investors Service, which provides financial analysis services and analysis of business organizations and government agencies. The company also provides top ranking credit worthiness of borrowers using a standardized ratings. The company has kontibusi 40% of the world market share of the credit. The ranking is done by Moody’s is in Indonesia itself is known as the “Moody’s Rating”. Moody’s was founded in 1909 by John Moody.
Most Important Tasks in the waistband Moody’s
That is done by moody’s is fundamental fiscal note, the level of economic power, as well as measuring the level of external weakness in the banking sector. Many people initially tend to doubt this assessment moody’s, because there are many U.S. banks have a lot of debt but given ratting AAA. But not long after, all provided in accordance ratting and analysis portion of a bank’s financial strength, Moody’s today so it can be trusted because the data are accurate.
Types of Moody’s ratings
Aaa bond quality is “best” at risk “very small”.
Aa1, Aa2, Aa3 bond quality is “good” at risk “small”.
A1, A2, A3 is a medium ranking bonds on the risk of the “small”.
Baa1, Baa2, Baa3 bond risk is moderate and usually speculative.
Ba1, Ba2, Ba3 bond with a speculative element and can be risky.
B1, B2, B3 bonds are considered speculative and high risk
Caa1, Caa2, Caa3 is a bond that is “unsound” and have a very high risk.
Ca is speculative bonds with a high level and the possibility of default.
C is the lowest-ranking bonds and usually default.
Examples Moody’s Gives Assessment
In the past year 2012, ratings agency Moody’s cut Spain’s debt rating three levels to Baa3 from A3. Approval of the euro zone to help Spanish banks considered would increase the country’s debt burden.
Conclusion
Ratings agencies Moody is a company engaged in the field of financial analysis and has been established since 1909. These ratings are important to ensure the state banks could be given appropriate credit ratings. If ratting goes down, it means confidence in the banks that caused the worse the capital borrowers are reluctant to channel more money into bonds makers