Markets · 6 pages · 12 min

How a credit rating is an opinion

A credit rating is an agency's opinion about credit risk, not a guarantee of payment or a recommendation to buy.

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From the opening

A credit rating is an opinion a rating agency publishes about the credit risk of a borrower or a debt, including whether promised payments are likely to be met. It is not a fact about the future, not a guarantee of payment, and not an audit of the borrower's books. The opening covers a symbol compresses a judgment, it can be revised or withdrawn, and it is not a buy instruction.

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Inside

A symbol compresses a judgment
It can be revised or withdrawn
It is not a buy instruction
Price risk is a different question
Where the idea stops applying
A distinction worth keeping

Sources

Credit rating agency opinion
Rating of structured mortgage securities

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How a credit rating is an opinion

From the opening

Inside

Sources

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