Moody’s

Definition

Moody's is a leading credit rating agency that provides financial research on bonds issued by commercial and government entities. It helps investors assess the risk associated with different securities.

5 Must Know Facts For Your Next Test

1. Moody's assigns credit ratings ranging from Aaa to C, indicating the creditworthiness of issuers.
2. The agency was founded in 1909 and is one of the 'Big Three' credit rating agencies alongside S&P Global Ratings and Fitch Ratings.
3. Moody's ratings influence interest rates and investment flows, impacting both corporate and government financing.
4. A downgrade in Moody's rating can lead to higher borrowing costs for an issuer due to perceived increased risk.
5. Investors and analysts use Moody’s ratings as a benchmark for making informed investment decisions.

Review Questions

• What does a credit rating from Moody’s represent?
• How can a downgrade by Moody’s affect an issuer?
• Why are Moody’s ratings important for investors?

Related terms

Standard & Poor's (S&P): One of the 'Big Three' credit rating agencies, known for its stock market indices like the S&P 500.

Fitch Ratings: Another major credit rating agency that provides financial information services similar to Moody’s.

Credit Rating:

An evaluation of the credit risk of a prospective debtor, predicting their ability to pay back debt.