Rating Symbols and

Definitions
24 March 2025
Preface
In the spirit of promoting transparency and clarity, Moody’s Ratings (“Moody’s”) Standing
Committee on Rating Symbols and Definitions offers this updated reference guide which defines
Moody’s various ratings symbols, rating scales and other ratings-related definitions. In addition
to credit ratings, this document contains symbols and definitions for Other Permissible Services,
Inputs to Ratings, and Research Transparency Assessments, which are symbols and scores that
are not credit ratings.
Since John Moody devised the first bond ratings more than a century ago, Moody’s rating
systems have evolved in response to the increasing depth and breadth of the global capital
markets. Much of the innovation in Moody’s rating system has been in response to market needs
for increased clarity around the components of credit risk or for finer distinctions in rating
classifications.
I invite you to contact us with your comments.
William Coley
Chair, Standing Committee on Rating Symbols and Definitions
+44.20.7772.8799
william.coley@moodys.com

Rating Symbols and Definitions 2

Table of contents
Preface 2
Credit Rating Services 6

Moody’s Global Rating Scales 6

Standard Linkage Between the Global Long-Term and Short-Term Rating Scales 8
Obligations and Issuers Rated on the Global Long-Term and Short-Term Rating Scales 9

Deposit Ratings 9
Clearing Counterparty Ratings 9
Counterparty Risk Ratings (CRR) 9
Corporate Family Ratings 9
Credit Default Swap Ratings 10
Enhanced Ratings 10
Insurance Financial Strength Ratings 10
Insured Ratings 10
Issuer Ratings 10
Long-Term And Short-Term Obligation Ratings 11
Medium-Term Note Program Ratings 11
Pledge-Specific Ratings 11
Structured Finance Counterparty Instrument Ratings 11
Structured Finance Counterparty Ratings 12
Structured Finance Interest Only Security (IO) Ratings 12
Underlying Ratings 12

US Municipal Short-Term Debt and Demand Obligation Ratings 13

MIG Ratings 13
VMIG Ratings 13
Standard Linkages Between the Long-Term and MIG and VMIG Short-Term Rating Scales 14

National Scale Long-Term Ratings 15

National Scale Short-Term Ratings 16
Probability of Default Ratings 17

Other Permissible Services 18

Bond Fund Assessments 18

Equity Fund Assessments 19
Indicative Ratings 19
Investment Manager Quality Assessments 19
Money Market Fund Assessments 20
Net Zero Assessments 21
Rating Symbols and Definitions 3
 Originator Assessments 21
Rating Assessment Services 22
Second Party Opinions - Sustainability Quality Scores 22
Servicer Quality Assessments 23

Other Rating Symbols 24

Provisional Ratings - (P) 24

Refundeds - # 24
Withdrawn - WR 24
Not Rated - NR 24
Not Available - NAV 24
Terminated Without Rating - TWR 24

Research Transparency Assessments 25

Covenant Quality Assessments 25

Inputs to Rating Services 25

Baseline Credit Assessments 25

Carbon Transition Indicators 26
Counterparty Risk Assessments 28
Country Ceilings 29
Credit Estimates 30
ESG Issuer Profile Scores 31
Loss Given Default Assessments 32
Q-scores 32
Speculative Grade Liquidity Ratings 33
Structured Credit Assessments (SCAs) 33
Timely Payment Indicator (TPI) 34

Other Definitions 35

ESG Credit Impact Scores 35

Rating Outlooks 35
Rating Reviews 36
Confirmation of a Rating 36
Affirmation of a Rating 36
Anticipated Ratings Process 36
Subsequent Ratings Process 37
Rating Agency Conditions (RACs) 37
Definition of Default 38
Definition of Impairment 40
Rating Symbols and Definitions 4
 Definition of Loss-Given-Default 40
Long-Term Credit Ratings for Defaulted Debt Instruments or Impaired Preferred Stocks or Hybrid
Securities 41

Approximate Expected Recoveries Associated With Ratings for Defaulted or Impaired Securities 41

Credit Rating Methodologies 42

Key Rating Assumptions 43
Benchmark Parameters Used in Rating Models 45
Idealized Probabilities of Default and Expected Losses 46
Internal Rate of Return (IRR) Reduction 46

Rating Symbols and Definitions 5

Credit Rating Services
Moody’s Global Rating Scales
Credit Ratings are assigned on Moody’s global long-term and short-term rating scales and are
forward-looking opinions of the relative credit risks of financial obligations issued by non-
financial corporates, financial institutions, structured finance vehicles, project finance vehicles,
and public sector entities. Moody’s defines credit risk as the risk that an entity may not meet its
contractual financial obligations as they come due and any estimated financial loss in the event
of default or impairment. The contractual financial obligations 1 addressed by Moody’s ratings are
those that call for, without regard to enforceability, the payment of an ascertainable amount,
which may vary based upon standard sources of variation (e.g., floating interest rates), by an
ascertainable date. Moody’s rating addresses the issuer’s ability to obtain cash sufficient to
service the obligation, and its willingness to pay. 2 Moody’s ratings do not address non-standard
sources of variation in the amount of the principal obligation (e.g., equity indexed), absent an
express statement to the contrary in a press release accompanying an initial rating. 3 Long-term
ratings are assigned to issuers or obligations with an original maturity of eleven months or more
and reflect both on the likelihood of a default or impairment on contractual financial obligations
and the expected financial loss suffered in the event of default or impairment. Short-term ratings
are assigned to obligations with an original maturity of thirteen months or less and reflect both
on the likelihood of a default or impairment on contractual financial obligations and the expected
financial loss suffered in the event of default or impairment. 4,5 6 Moody’s issues ratings at the
issuer level and instrument level on both the long-term scale and the short-term scale. Typically,
ratings are made publicly available although private and unpublished ratings may also be
assigned. 7

1
In the case of impairments, there can be a financial loss even when contractual obligations are met. See the definition
of Impairment in this publication.
2
For issuer level ratings, see the definition of Issuer Ratings in this publication. In some cases the relevant credit risk
relates to a third party, in addition to, or instead of the issuer. Examples include credit-linked notes and guaranteed
obligations.
3
Because the number of possible features or structures is limited only by the creativity of issuers, Moody’s cannot
comprehensively catalogue all the types of non-standard variation affecting financial obligations, but examples include
equity indexed principal values and cash flows, prepayment penalties, and an obligation to pay an amount that is not
ascertainable at the inception of the transaction.
4
For certain preferred stock and hybrid securities in which payment default events are either not defined or do not match
investors’ expectations for timely payment, long-term and short-term ratings reflect the likelihood of impairment (as
defined below in this publication) and financial loss in the event of impairment.
5
Debts held on the balance sheets of official sector institutions – which include supranational institutions, central banks
and certain government-owned or controlled banks – may not always be treated the same as debts held by private
investors and lenders. When it is known that an obligation is held by official sector institutions as well as other
investors, a rating (short-term or long-term) assigned to that obligation reflects only the credit risks faced by non-
official sector investors.
6
Where grace periods are disproportionately long relative to the stated maturity, Moody’s may choose not to rate the
instrument. This is particularly relevant in the commercial paper market where maturities may be 30 days or less with a
strong investor expectation of prompt payment.
7
For information on how to obtain a Moody’s credit rating, including private and unpublished credit ratings, please see
Moody’s Ratings Products and Services . Please note that Moody’s always reserves the right to choose not to assign or
maintain a credit rating for its own business reasons.
Rating Symbols and Definitions 6
Moody’s differentiates structured finance ratings from fundamental ratings (i.e., ratings on
nonfinancial corporate, financial institution, and public sector entities) on the global long-term
scale by adding (sf) to all structured finance ratings. 8 The addition of (sf) to structured finance
ratings should eliminate any presumption that such ratings and fundamental ratings at the same
letter grade level will behave the same. The (sf) indicator for structured finance security ratings
indicates that otherwise similarly rated structured finance and fundamental securities may have
different risk characteristics. Through its current methodologies, however, Moody’s aspires to
achieve broad expected equivalence in structured finance and fundamental rating performance
when measured over a long period of time.

Global Long-Term Rating Scale

Aaa Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk.

Aa Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.

A Obligations rated A are judged to be upper-medium grade and are subject to low credit risk.

Baa Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess
certain speculative characteristics.

Ba Obligations rated Ba are judged to be speculative and are subject to substantial credit risk.

B Obligations rated B are considered speculative and are subject to high credit risk.

Caa Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk.

Ca Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of
principal and interest.

C Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or
interest.

Note: Moody’s appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that
the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a
ranking in the lower end of that generic rating category. Additionally, a “(hyb)” indicator is appended to all ratings of hybrid securities issued by
banks, insurers, finance companies, and securities firms.*
Note: For more information on long-term ratings assigned to obligations in default, please see the definition “Long-Term Credit Ratings for
Defaulted Debt Instruments or Impaired Preferred Stocks or Hybrid Securities” in the Other Definitions section of this publication.
* By their terms, hybrid securities allow for the omission of scheduled dividends, interest, or principal payments, which can potentially result in
impairment if such an omission occurs. Hybrid securities may also be subject to contractually allowable write-downs of principal that could
result in impairment. Together with the hybrid indicator, the long-term obligation rating assigned to a hybrid security is an expression of the
relative credit risk associated with that security.

8
Like other global scale ratings, (sf) ratings reflect both the likelihood of a default and the expected loss suffered in the
event of default. Ratings are assigned based on a rating committee’s assessment of a security’s expected loss rate
(default probability multiplied by expected loss severity), and may be subject to the constraint that the final expected
loss rating assigned would not be more than a certain number of notches, typically three to five notches, above the
rating that would be assigned based on an assessment of default probability alone. The magnitude of this constraint
may vary with the level of the rating, the seasoning of the transaction, and the uncertainty around the assessments of
expected loss and probability of default.
Rating Symbols and Definitions 7
 Global Short-Term Rating Scale

P-1 Ratings of Prime-1 reflect a superior ability to repay short-term obligations.

P-2 Ratings of Prime-2 reflect a strong ability to repay short-term obligations.

P-3 Ratings of Prime-3 reflect an acceptable ability to repay short-term obligations.

NP Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime rating categories.

Standard Linkage Between the Global Long-Term and

Short-Term Rating Scales
The following table indicates the long-term ratings consistent with different short-term ratings
when such long-term ratings exist. 9

9
Structured finance short-term ratings are usually based either on the short-term rating of a support provider or on an
assessment of cash flows available to retire the financial obligation.
Rating Symbols and Definitions 8
Obligations and Issuers Rated on the Global Long-Term and
Short-Term Rating Scales

Deposit Ratings
Deposit Ratings are opinions of a deposit-taking institution’s ability to repay punctually its
foreign and/or domestic currency deposit obligations and also reflect the expected financial loss
of the default. Deposit Ratings do not apply to deposits that are subject to a public or private
insurance scheme; rather, the ratings apply to the most junior class of uninsured deposits, but
they may in some cases incorporate the possibility that official support might in certain cases
extend to the most junior class of uninsured as well as preferred and insured deposits. Foreign
currency deposit ratings are subject to Moody’s foreign currency country ceilings which may
result in the assignment of a different (and typically lower) rating for the foreign currency
deposits relative to the deposit-taking institution’s rating for domestic currency deposits.

Clearing Counterparty Ratings

A Clearing Counterparty Rating (CCR) reflects Moody’s opinion of a Central Counterparty
Clearing House’s (CCP) ability to meet the timely clearing and settlement of clearing obligations
by the CCP as well as the expected financial loss in the event the obligation is not fulfilled. A
CCR can be assigned at a CCP legal entity or clearing service level to the extent a legal entity
operates multiple clearing services.

Counterparty Risk Ratings (CRR)

CRRs are opinions of the ability of entities to honor their non-debt financial liabilities, typically to
unrelated counterparties (CRR liabilities), such as derivatives and sale and repurchase
transactions. CRRs also reflect the expected financial losses not covered by collateral, in the
event such liabilities are not honored. For clarity, CRRs are not applicable to funding
commitments or other obligations associated with covered bonds, letters of credit, guarantees,
servicer and trustee obligations, and other similar obligations that arise from a bank performing
its essential operating functions.

Corporate Family Ratings

Moody’s Corporate Family Ratings (CFRs) are long-term ratings that reflect the relative likelihood
of a default on a corporate family’s debt and debt-like obligations and the expected financial loss
suffered in the event of default. A CFR is assigned to a corporate family as if it had a single class
of debt and a single consolidated legal entity structure. CFRs are generally employed for
speculative grade obligors. Under certain very limited circumstances, CFRs may also be assigned
to investment grade obligors. The CFR normally applies to all affiliates under the management
control of the entity to which it is assigned. For financial institutions or other complex entities,
CFRs may also be assigned to an association or group where the group may not exercise full
management control, but where strong intra-group support and cohesion among individual group
members may warrant a rating for the group or association. A CFR does not reference an
obligation or class of debt and thus does not reflect priority of claim.

Rating Symbols and Definitions 9

Credit Default Swap Ratings
Credit Default Swap Ratings measure the risk associated with the obligations that a credit
protection provider has with respect to credit events under the terms of the transaction. The
ratings do not address potential losses resulting from an early termination of the transaction, nor
any market risk associated with the transaction.

Enhanced Ratings
Enhanced Ratings only pertain to US municipal securities. Enhanced ratings are assigned to
obligations that benefit from third-party credit or liquidity support, including state aid intercept
programs. They primarily reflect the credit quality of the support provider, and, in some cases,
also reflect the credit quality of the underlying obligation. Enhanced ratings do not incorporate
support based on insurance provided by financial guarantors.

Insurance Financial Strength Ratings

Insurance Financial Strength Ratings are opinions of the ability of insurance companies to
punctually pay senior policyholder claims and obligations and also reflect the expected financial
loss suffered in the event of default.

Insured Ratings
An insured or wrapped rating is Moody’s assessment of a particular obligation’s credit quality
given the credit enhancement provided by a financial guarantor. Moody’s insured ratings apply a
credit substitution methodology, whereby the debt rating matches the higher of (i) the guarantor’s
financial strength rating and (ii) any published underlying rating on the security.

Issuer Ratings
Issuer Ratings are opinions of the ability of entities to honor senior unsecured debt and debt like
obligations. 10,11 As such, Issuer Ratings incorporate any external support that is expected to apply
to all current and future issuance of senior unsecured financial obligations and contracts, such
as explicit support stemming from a guarantee of all senior unsecured financial obligations and
contracts, and/or implicit support for issuers subject to joint default analysis (e.g. banks and
government-related issuers). Issuer Ratings do not incorporate support arrangements, such as
guarantees, that apply only to specific (but not to all) senior unsecured financial obligations and
contracts.
While Issuer Ratings reflect the risk that debt and debt-like claims are not serviced on a timely
basis, they do not reflect the risk that a contract or other non-debt obligation will be subjected to
commercial disputes. Additionally, while an issuer may have senior unsecured obligations held by

10
Issuer Ratings as applied to US local government special purpose districts typically reflect an unlimited general
obligation pledge which may have security and structural features in some states that improve credit quality for general
obligation bondholders but not necessarily for other counterparties holding obligations that may lack such features. An
Issuer Rating as applied to a US state, territory, K-12 public school district, city or county reflects its ability to repay
debt and debt-like obligations without consideration of any pledge, security or structural features.
11
These opinions exclude debt known to be held by official sector investors because in practice such debt could
effectively be treated as either senior or junior to senior unsecured debt held by private sector investors.
Rating Symbols and Definitions 10
both supranational institutions and central banks (e.g., IMF, European Central Bank), as well as
other investors, Issuer Ratings reflect only the risks faced by other investors.

Long-Term And Short-Term Obligation Ratings

Moody’s assigns ratings to long-term and short-term financial obligations. Long-term ratings are
assigned to issuers or obligations with an original maturity of eleven months or more and reflect
both on the likelihood of a default or impairment on contractual financial obligations and the
expected financial loss suffered in the event of default or impairment. Short-term ratings are
assigned to obligations with an original maturity of thirteen months or less and reflect both on
the likelihood of a default or impairment on contractual financial obligations and the expected
financial loss suffered in the event of default or impairment.

Medium-Term Note Program Ratings

Moody’s assigns provisional ratings to medium-term note (MTN) or similar programs and
definitive ratings to the individual debt securities issued from them (referred to as drawdowns or
notes).
MTN program ratings are intended to reflect the ratings likely to be assigned to drawdowns
issued from the program with the specified priority of claim (e.g. senior or subordinated). To
capture the contingent nature of a program rating, Moody’s assigns provisional ratings to MTN
programs. A provisional rating is denoted by a (P) in front of the rating and is defined elsewhere
in this document.
The rating assigned to a drawdown from a rated MTN or bank/deposit note program is definitive
in nature, and may differ from the program rating if the drawdown is exposed to additional credit
risks besides the issuer’s default, such as links to the defaults of other issuers, or has other
structural features that warrant a different rating. In some circumstances, no rating may be
assigned to a drawdown.
Moody’s encourages market participants to contact Moody’s Ratings Desks or visit moodys.com
directly if they have questions regarding ratings for specific notes issued under a medium-term
note program. Unrated notes issued under an MTN program may be assigned an NR (not rated)
symbol.

Pledge-Specific Ratings
Pledge-specific ratings are opinions of the ability of a US state, local government, related entity,
or nonprofit issuer to honor debt and debt-like obligations based upon specific security payment
pledges or structural features.

Structured Finance Counterparty Instrument Ratings

Structured Finance Counterparty Instrument Ratings are assigned to a financial contract and
measure the risk posed to a counterparty arising from a special purpose entity’s (SPE’s) default
with respect to its obligations under the referenced financial contract.

Rating Symbols and Definitions 11

Structured Finance Counterparty Ratings
Structured Finance Counterparty Ratings are assigned to structured financial operating
companies and are founded upon an assessment of their ability and willingness to honor their
obligations under financial contracts.

Structured Finance Interest Only Security (IO) Ratings

A structured finance IO is a stream of cash flows that is a fraction of the interest flows from one
or multiple referenced securities or assets in a structured finance transaction. IO ratings address
the likelihood and degree to which payments made to the IO noteholders will be impacted by
credit losses to the security, securities or assets referenced by the IO. Such IO securities
generally do not have a principal balance. Other non- credit risks, such as a prepayment of the
referenced securities or assets, are not addressed by the rating, although they may impact
payments made to the noteholders.

Underlying Ratings
An underlying rating is Moody’s assessment of a particular obligation’s credit quality absent any
insurance or wrap from a financial guarantor or other credit enhancement.
For US municipal securities, the underlying rating will reflect the underlying issue’s standalone
credit quality absent any credit support provided by a state credit enhancement program.

Rating Symbols and Definitions 12

US Municipal Short-Term Debt and Demand Obligation Ratings
We use the global short-term Prime rating scale for commercial paper issued by US
municipalities and nonprofits. These commercial paper programs may be backed by external
letters of credit or liquidity facilities, or by an issuer’s self-liquidity.
For other short-term municipal obligations, we use one of two other short-term rating scales, the
Municipal Investment Grade (MIG) and Variable Municipal Investment Grade (VMIG) scales
discussed below.

MIG Ratings
We use the MIG scale for US municipal cash flow notes, bond anticipation notes and certain
other short-term obligations, which typically mature in three years or less.

MIG Scale

MIG 1 This designation denotes superior credit quality. Excellent protection is afforded by established cash flows, highly
reliable liquidity support, or demonstrated broad-based access to the market for refinancing.

MIG 2 This designation denotes strong credit quality. Margins of protection are ample, although not as large as in the
preceding group.

MIG 3 This designation denotes acceptable credit quality. Liquidity and cash-flow protection may be narrow, and market
access for refinancing is likely to be less well-established.

SG This designation denotes speculative-grade credit quality. Debt instruments in this category may lack sufficient
margins of protection.

VMIG Ratings
For variable rate demand obligations (VRDOs), Moody’s assigns both a long-term rating and a
short-term payment obligation rating. The long-term rating addresses the issuer’s ability to meet
scheduled principal and interest payments. The short-term payment obligation rating addresses
the ability of the issuer or the liquidity provider to meet any purchase price payment obligation
resulting from optional tenders (“on demand”) and/or mandatory tenders of the VRDO. The short-
term payment obligation rating uses the VMIG scale. Transitions of VMIG ratings with conditional
liquidity support differ from transitions of Prime ratings reflecting the risk that external liquidity
support will terminate if the issuer’s long-term rating drops below investment grade. Please see
our methodology that discusses obligations with conditional liquidity support.
For VRDOs, we typically assign a VMIG rating if the frequency of the payment obligation is less
than every three years. If the frequency of the payment obligation is less than three years, but
the obligation is payable only with remarketing proceeds, the VMIG short-term rating is not
assigned and it is denoted as “NR”.
Industrial development bonds in the US where the obligor is a corporate may carry a VMIG rating
that reflects Moody’s view of the relative likelihood of default and loss. In these cases, liquidity
assessment is based on the liquidity of the corporate obligor.

Rating Symbols and Definitions 13

 VMIG Scale

VMIG 1 This designation denotes superior credit quality. Excellent protection is afforded by the superior short-term credit
strength of the liquidity provider and structural and legal protections.

VMIG 2 This designation denotes strong credit quality. Good protection is afforded by the strong short-term credit strength
of the liquidity provider and structural and legal protections.

VMIG 3 This designation denotes acceptable credit quality. Adequate protection is afforded by the satisfactory short-term
credit strength of the liquidity provider and structural and legal protections.

SG This designation denotes speculative-grade credit quality. Demand features rated in this category may be supported
by a liquidity provider that does not have a sufficiently strong short-term rating or may lack the structural or
legal protections.

Standard Linkages Between the Long-Term and MIG and VMIG Short-Term
Rating Scales
The following table indicates the municipal long-term ratings consistent with the highest
potential MIG and VMIG short-term ratings. The rating may be lower than indicated by this table
when there are higher risks for investors.

Rating Symbols and Definitions 14

National Scale Long-Term Ratings
Moody’s long-term National Scale Ratings (NSRs) are opinions of the relative creditworthiness of
issuers and financial obligations within a particular country. NSRs are not designed to be
compared among countries; rather, they address relative credit risk within a given country.
Moody’s assigns national scale ratings in certain local capital markets in which investors have
found the global rating scale provides inadequate differentiation among credits or is inconsistent
with a rating scale already in common use in the country.
In each specific country, the last two characters of the rating indicate the country in which the
issuer is located or the financial obligation was issued (e.g., Aaa.ke for Kenya).

Long-Term NSR Scale

Aaa.n Issuers or issues rated Aaa.n demonstrate the strongest creditworthiness relative to other domestic issuers
and issuances.

Aa.n Issuers or issues rated Aa.n demonstrate very strong creditworthiness relative to other domestic issuers
and issuances.

A.n Issuers or issues rated A.n demonstrate above-average creditworthiness relative to other domestic issuers
and issuances.

Baa.n Issuers or issues rated Baa.n demonstrate average creditworthiness relative to other domestic issuers
and issuances.

Ba.n Issuers or issues rated Ba.n demonstrate below-average creditworthiness relative to other domestic issuers
and issuances.

B.n Issuers or issues rated B.n demonstrate weak creditworthiness relative to other domestic issuers and issuances.

Caa.n Issuers or issues rated Caa.n demonstrate very weak creditworthiness relative to other domestic issuers
and issuances.

Ca.n Issuers or issues rated Ca.n demonstrate extremely weak creditworthiness relative to other domestic issuers and
issuances.

C.n Issuers or issues rated C.n demonstrate the weakest creditworthiness relative to other domestic issuers
and issuances.

Note: Moody’s appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that
the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a
ranking in the lower end of that generic rating category.

Rating Symbols and Definitions 15

National Scale Short-Term Ratings
Moody’s short-term NSRs are opinions of the ability of issuers or issuances in a given country,
relative to other domestic issuers or issuances, to repay debt obligations that have an original
maturity not exceeding thirteen months. Short-term NSRs in one country should not be compared
with short-term NSRs in another country, or with Moody’s global ratings.
There are four categories of short-term national scale ratings, generically denoted N-1 through N-
4 as defined below.
In each specific country, the first two letters indicate the country in which the issuer is located
(e.g., KE-1 through KE-4 for Kenya).

Short-Term NSR Scale

N-1 N-1 issuers or issuances represent the strongest likelihood of repayment of short-term debt obligations relative to
other domestic issuers or issuances.

N-2 N-2 issuers or issuances represent an above average likelihood of repayment of short-term debt obligations relative
to other domestic issuers or issuances.

N-3 N-3 issuers or issuances represent an average likelihood of repayment of short-term debt obligations relative to other
domestic issuers or issuances.

N-4 N-4 issuers or issuances represent a below average likelihood of repayment of short-term debt obligations relative to
other domestic issuers or issuances.

Note: The short-term rating symbols P-1.za, P-2.za, P-3.za and NP.za are used in South Africa.

The symbols for the long-term and short-term NSRs are:

→ Czech Republic (.cz)
→ Kazakhstan (.kz)
→ Kenya (.ke)
→ Lebanon (.lb)
→ Morocco (.ma)
→ Nigeria (.ng)
→ Saudi Arabia (.sa)
→ Slovakia (.sk)
→ South Africa (.za)
→ Tunisia (.tn)
→ Turkiye (.tr)
→ Ukraine (.ua)

Rating Symbols and Definitions 16

Probability of Default Ratings
A probability of default rating (PDR) is a corporate family- level opinion of the relative likelihood
that any entity within a corporate family will default on one or more of its long-term debt
obligations. For families in default on all of their long-term debt obligations (such as might be the
case in bankruptcy), a PDR of D-PD is assigned. For families in default on a limited set of their
debt obligations, the PDR is appended by the indicator “/LD”, for example, Caa1-PD/LD.
A D-PD probability of default rating is not assigned (or /LD indicator appended) until a failure to
pay interest or principal extends beyond any grace period specified by the terms of the debt
obligation.
A D-PD probability of default rating is not assigned (or /LD indicator appended) for distressed
exchanges until they have been completed, as opposed to simply announced.
Adding or removing the “/LD” indicator to an existing PDR is not a credit rating action.

PDR Scale

Aaa-PD Corporate families rated Aaa-PD are judged to be of the highest quality, subject to the lowest level of default risk.

Aa-PD Corporate families rated Aa-PD are judged to be of high quality and are subject to very low default risk.

A-PD Corporate families rated A-PD are judged to be upper-medium grade and are subject to low default risk.

Baa-PD Corporate families rated Baa-PD are judged to be medium-grade and subject to moderate default risk and as such
may possess certain speculative characteristics.

Ba-PD Corporate families rated Ba-PD are judged to be speculative and are subject to substantial default risk.

B-PD Corporate families rated B-PD are considered speculative and are subject to high default risk.

Caa-PD Corporate families rated Caa-PD are judged to be speculative of poor standing, subject to very high default risk,
and may be in default on some but not all of their long-term debt obligations.

Ca-PD Corporate families rated Ca-PD are highly speculative and are likely in, or very near, default on some but not all of
their long-term debt obligations.

C-PD Corporate families rated C-PD are the lowest rated and are typically in default on some but not all of their long-
term debt obligations.

D-PD Corporate families rated D are in default on all of their long-term debt obligations.

Note: Moody’s appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa-PD through Caa-PD (e.g., Aa1-PD). The
modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates a ranking in the lower end of that generic rating category.

Rating Symbols and Definitions 17

Other Permissible Services
Other Permissible Services are not Credit Ratings.

Bond Fund Assessments

Moody’s Bond Fund assessments are opinions of the maturity-adjusted credit quality of assets
within the portfolio of a mutual fund, or similar investment vehicles that principally invest in fixed
income obligations, and of the operational risk associated with managing the fund. In some
cases, heightened operational risk may constrain a fund’s assessment, regardless of the quality
of the assets within the portfolio.
Bond Fund assessments exclude other risks, such as asset liquidity, interest rate, currency and
any other market risk. The assessments also do not consider the historic, current, or prospective
performance of a fund with respect to appreciation, volatility of net asset value, or yield.

Bond Fund Assessment Scale

Aaa-bf Bond funds assessed at Aaa-bf generally hold assets judged to be of the highest credit quality.

Aa-bf Bond funds assessed at Aa-bf generally hold assets judged to be of high credit quality.

A-bf Bond funds assessed at A-bf generally hold assets considered upper-medium credit quality.

Baa-bf Bond funds assessed at Baa-bf generally hold assets considered medium credit quality.

Ba-bf Bond funds assessed at Ba-bf generally hold assets judged to have speculative elements.

B-bf Bond funds assessed at B-bf generally hold assets considered to be speculative.

Caa-bf Bond funds assessed at Caa-bf generally hold assets judged to be of poor standing.

Ca-bf Bond funds assessed at Ca-bf generally hold assets that are highly speculative and that are likely in, or
very near, default, with some prospect of recovery of principal and interest.

C-bf Bond funds assessed at C-bf generally hold assets that are in default, with little prospect for recovery of principal
or interest.

Rating Symbols and Definitions 18

Equity Fund Assessments
Moody’s Equity Fund assessments are opinions of the relative investment quality of investment
funds which principally invest in common stock or in a combination of common stock and fixed-
income securities. Investment quality is typically judged based on the fund’s historical
performance relative to funds employing a similar investment strategy, as well as on the quality of
the fund manager. The assessments are not opinions on prospective performance of a fund with
respect to asset appreciation, volatility of net asset value or yield. They are not intended to be
used to compare funds in different countries or even funds in the same country that are pursuing
different investment strategies (e.g. balanced funds vs. equity funds).

Equity Fund Assessment Scale

EF-1 Equity funds assessed at EF-1 have the highest investment quality relative to funds with a similar
investment strategy.

EF-2 Equity funds assessed at EF-2 have high investment quality relative to funds with a similar investment strategy.

EF-3 Equity funds assessed at EF-3 have moderate investment quality relative to funds with a similar investment strategy.

EF-4 Equity funds assessed at EF-4 have low investment quality relative to funds with a similar investment strategy.

EF-5 Equity funds assessed at EF-5 have the lowest investment quality relative to funds with a similar investment strategy.

Indicative Ratings
An Indicative Rating is a confidential, unpublished, unmonitored, point-in-time opinion of the
potential Credit Rating(s) of an issuer or a proposed debt issuance by an issuer contemplating
such a debt issuance at some future date. Indicative Ratings are not equivalent to and do not
represent traditional Moody’s Credit Ratings. However, Indicative Ratings are expressed on
Moody’s traditional rating scale.

Investment Manager Quality Assessments

Moody’s Investment Manager Quality assessments are forward- looking opinions of the relative
investment expertise and service quality of asset managers. An MQ assessment provides an
additional tool for investors to aid in their investment decision- making process. Moody’s MQ
assessments provide general insights into the quality of an asset manager, including how it
manages its investment offerings and serves its clientele.
MQ assessments do not indicate an asset manager’s ability to repay a fixed financial obligation
or satisfy contractual financial obligations, neither those entered by the firm nor any that may
have been entered into through actively managed portfolios.
The assessments are also not intended to evaluate the performance of a portfolio, mutual fund,
or other investment vehicle with respect to appreciation, volatility of net asset value, or yield.
Instead, MQ assessments are opinions about the quality of an asset manager’s management and
client service characteristics as expressed through the symbols below.

Rating Symbols and Definitions 19

Investment Manager Quality assessment definitions are as follows:

Manager Quality Assessment Scale

MQ1 Investment managers assessed at MQ1 exhibit excellent management characteristics.

MQ2 Investment managers assessed at MQ2 exhibit very good management characteristics.

MQ3 Investment managers assessed at MQ3 exhibit good management characteristics.

MQ4 Investment managers assessed at MQ4 exhibit adequate management characteristics.

MQ5 Investment managers assessed at MQ5 exhibit poor management characteristics.

Money Market Fund Assessments

Moody’s Money Market Fund assessments are opinions of the investment quality of shares in
mutual funds and similar investment vehicles that principally invest in short-term fixed income
obligations. As such, these assessments incorporate Moody’s assessment of a fund’s published
investment objectives and policies, the creditworthiness of the assets held by the fund, the
liquidity profile of the fund’s assets relative to the fund’s investor base, the assets’ susceptibility
to market risk, as well as the management characteristics of the fund. The assessments are not
intended to consider the prospective performance of a fund with respect to appreciation,
volatility of net asset value, or yield.

Money Market Fund Assessment Scale

Aaa-mf Money market funds assessed at Aaa-mf have very strong ability to meet the dual objectives of providing liquidity
and preserving capital.

Aa-mf Money market funds assessed at Aa-mf have strong ability to meet the dual objectives of providing liquidity and
preserving capital.

A-mf Money market funds assessed at A-mf have moderate ability to meet the dual objectives of providing liquidity and
preserving capital.

Baa-mf Money market funds assessed at Baa-mf have marginal ability to meet the dual objectives of providing liquidity and
preserving capital.

B-mf Money market funds assessed at B-mf are unable to meet the objective of providing liquidity and have marginal
ability to meet the objective of preserving capital.

C-mf Money market funds assessed at C-mf are unable to meet either objective of providing liquidity or
preserving capital.

Rating Symbols and Definitions 20

Net Zero Assessments
A Net Zero Assessment (NZA) represents our opinion of the strength of an entity’s emissions
reduction profile relative to a global net zero pathway consistent with the most ambitious goals of
the 2015 Paris Agreement on climate change of limiting temperature increases to 1.5°C, with
global net zero achieved in 2050. The assessment has three components: Ambition,
Implementation, and Greenhouse Gases (GHG) Governance. Net Zero Assessments are expressed
on a five-point scale that represents gradations of meaningful carbon transition profiles. Net Zero
Assessments are point-in-time opinions.

Net Zero Assessment Scale

Score Definition
NZ-1 The entity has a leading emissions reduction profile. Its emissions reduction targets are consistent with an
ambition to limit temperature increases to at most 1.5 degrees Celsius. Implementation and governance oversights
are supportive of reaching the ambitious targets.

NZ-2 The entity has an advanced emissions reduction profile. Its emissions reduction targets are consistent with an
ambition to limit temperature increases to at most well below 2 degrees Celsius. Where targets are more
ambitious, the score is constrained by implementation or governance risks.

NZ-3 The entity has a significant emissions reduction profile. Its emissions reduction targets are consistent with an
ambition to limit temperature increases to at most 2 degrees Celsius. Where targets are more ambitious, the score
is constrained by implementation or governance risks that are more material than for an NZ-2.

NZ-4 The entity has a constructive emissions reduction profile. Its emissions reduction targets are consistent with an
ambition to limit temperature increases to at most 2.3 degrees Celsius. Where targets are more ambitious, the score
is constrained by implementation or governance risks that are more material than for an NZ-3.

NZ-5[1] The entity has a limited emissions reduction profile. Its emissions reduction targets are consistent with an
ambition to limit temperature increases to at most 2.5 degrees Celsius. Some entities in this category may have
more ambitious targets, but the score is constrained by implementation or governance risks that are more material
than for an NZ-4.

[1] We do not provide Net Zero Assessments to entities whose carbon transition profiles do not imply a meaningful contribution towards
climate goals, which we define as an implied temperature rise of 2.5 degrees Celsius or below relative to pre-industrial levels.

Originator Assessments
Moody’s Originator Assessments (OAs) provide general insights into the operational quality of
originators’ loan origination practices, relative to other originators of the same type of loans
within a given country.
Moody’s assigns originators one of the following five assessment levels: Strong, Above Average,
Average, Below Average, Weak.

Rating Symbols and Definitions 21

Rating Assessment Services
The Rating Assessment Service or RAS is a confidential, unpublished, unmonitored, point-in-time
opinion relating to potential Credit Rating(s), or the potential impact on the current Credit
Rating(s), given one or more hypothetical Scenario(s) (defined below) communicated to Moody’s
in writing by a Rated Entity or other applicant. Rating Assessments are not equivalent to and do
not represent traditional Moody’s Credit Ratings. However, Rating Assessments are expressed on
or referenced to Moody’s traditional rating scale.
A Scenario is (1) a proposed credit transforming transaction, project and/or debt issuance which
materially alters the issuer’s current state (including acquisitions, disposals, share buybacks,
listings, initial public offerings and material restructurings) or (2) a proposed initial transaction,
project and/or debt issuance; or materially different variation on any such transaction, project
and/or debt issuance, including a material change in the overall size of the debt being
contemplated.

Second Party Opinions - Sustainability Quality Scores

Moody’s Second Party Opinions provide an assessment of how financial instruments or financing
frameworks align to relevant sustainability principles and the extent to which they are expected
to contribute to the issuer’s advancement of long-term sustainable development. Moody’s
Second Party Opinions consider alignment with principles and contribution to sustainability. We
express the overall assessment through the Sustainability Quality Score. Second Party Opinions
are point-in-time opinions.

Second Party Opinion - Sustainability Quality Scores Scale

SQS1 The financial instrument or financing framework is overall considered to be of excellent sustainability quality.
Documentation and information are aligned with relevant principles and exhibit a high level of transparency and
issuer accountability consistent with best practices, and the instrument or framework is expected to make a high
contribution to the issuer’s advancement of long-term sustainable development.

SQS2 The financial instrument or financing framework is overall considered to be of very good sustainability quality.
Documentation and information are at least aligned with relevant principles and the instrument or framework is
expected to make at least a significant contribution to the issuer’s advancement of long-term sustainable
development.

SQS3 The financial instrument or financing framework is overall considered to be of good sustainability quality.
Documentation and information are typically at least aligned with relevant principles and the instrument or
framework is expected to make at least a moderate contribution to the issuer’s advancement of long-term
sustainable development, or the documentation or information is partially aligned with relevant principles and is
balanced by an expected high contribution.

SQS4 The financial instrument or financing framework is overall considered to be of intermediate sustainability quality.
There are some weaknesses identified in the alignment of the documentation and information with relevant
principles or in the contribution the financial instrument or financing framework is expected to make to the issuer’s
advancement of long-term sustainable development, with limited offsetting strengths.

SQS5 The financial instrument or financing framework is overall considered to be of weak sustainability quality. There are
material weaknesses identified in the alignment of the documentation and information or in the contribution the
financial instrument or financing framework is expected to make to the issuer’s advancement of long-term
sustainable development, with no or very limited offsetting strengths.

Rating Symbols and Definitions 22

Servicer Quality Assessments
Moody’s Servicer Quality Assessments (SQAs) provide general insights into the operational
quality of servicers’ loan servicing practices, relative to other servicers performing the same
servicing role within a given country. SQAs are provided for servicers who act as the Primary
Servicer (servicing the assets from beginning to end), Special Servicer (servicing only the more
delinquent assets), or Master Servicer (overseeing the performance and reporting from underlying
servicers). Each SQA is assigned for a specific servicing role by reference to the servicing activity
and product type.

Servicer Quality Assessment Scale

SQ1 Strong.

SQ2 Above average.

SQ3 Average.

SQ4 Below average.

SQ5 Weak.

Note: Where appropriate, a “+” or “-” modifier will be appended to the SQ2, SQ3, and SQ4 rating categories, a “-” modifier will be appended to
the SQ1 assessment category and a “+” modifier will be appended to the SQ5 assessment category. A “+” modifier indicates the servicer ranks
in the higher end of the designated assessment category. A “-” modifier indicates the servicer ranks in the lower end of the designated
assessment category.

Rating Symbols and Definitions 23

Other Rating Symbols
Provisional Ratings - (P)
Moody’s will often assign a provisional rating to an issuer or an instrument when the change to a
definitive rating is subject to the fulfilment of contingencies that could affect the rating.
Examples of such contingencies are the finalization of transaction documents/terms where a
rating is sensitive to changes at closing. When such contingencies are not present, a definitive
rating may be assigned based upon documentation that is not yet in final form. Moody’s will also
often assign provisional ratings to program ratings, such as shelf registrations and medium term
note programs. A provisional rating is denoted by placing a (P) in front of the rating. The (P)
notation provides additional information about the rating, but does not indicate a different rating.
For example, a provisional rating of (P)Aa1 is the same rating as Aa1.
For provisional ratings assigned to an issuer or instrument, the (P) notation is removed when the
applicable contingencies have been fulfilled. A Credit Rating Action to remove the (P) notation
indicates that the rating is no longer subject to contingencies, and changes the provisional rating
to a definitive rating. 12 Program ratings for shelf registrations and other issuance programs
remain provisional, while the subsequent ratings of issuances under these programs are assigned
as definitive ratings.

Refundeds - #
Issues that are secured by escrowed funds held in trust, reinvested in direct, non-callable US
government obligations or non-callable obligations unconditionally guaranteed by the US
Government or Resolution Funding Corporation are identified with a # (hash mark) symbol, e.g.,
#Aaa.

Withdrawn - WR
When Moody’s no longer rates an obligation on which it previously maintained a rating, the
symbol WR is employed. Please see Moody’s Guidelines for the Withdrawal of Ratings, available
on www.moodys.com.

Not Rated - NR
NR is assigned to an unrated issuer, obligation and/or program.

Not Available - NAV

An issue that Moody’s has not yet rated is denoted by the NAV symbol.

Terminated Without Rating - TWR

The symbol TWR applies primarily to issues that mature or are redeemed without having been
rated.

12
Provisional ratings may also be assigned to unexecuted credit default swap contracts or other debt-like obligations that
define specific credit risk exposures facing individual financial institutions. In such cases, the drafter of the swap or
other debt-like obligation may have no intention of executing the agreement, and, therefore, the provisional notation is
unlikely to ever be removed.
Rating Symbols and Definitions 24
Research Transparency Assessments
Covenant Quality Assessments
Moody’s covenant quality assessments measure the investor protections provided by key bond
covenants within an indenture. The assessments are unmonitored, point-in-time scores, but may
be updated as circumstances dictate. Key covenants assessed include provisions for restricted
payments, change of control, limitations on debt incurrence, negative pledges, and merger
restrictions, among others.

Inputs to Rating Services

Inputs to Rating Services are not Credit Ratings and they are expressed using differentiated
symbols to distinguish them from Credit Ratings. Their use in helping to assign Credit Ratings is
described in the respective Credit Rating Methodologies where they are used.

Baseline Credit Assessments

Baseline credit assessments (BCAs) are opinions of issuers’ standalone intrinsic strength, absent
any extraordinary support from an affiliate 13 or a government. BCAs are essentially an opinion on
the likelihood of an issuer requiring extraordinary support to avoid a default on one or more of its
debt obligations or actually defaulting on one or more of its debt obligations in the absence of
such extraordinary support.

As probability measures, BCAs do not provide an opinion on the severity of a default that would
occur in the absence of extraordinary support.

Contractual relationships between a government or an affiliate and a supported issuer and any
expected ongoing annual subsidies from the government or an affiliate are incorporated in BCAs
and, therefore, are considered intrinsic to an issuer’s standalone financial strength. Extraordinary
support is typically idiosyncratic in nature and is extended to prevent an issuer from becoming
nonviable.

BCAs are expressed on a lower-case alpha-numeric scale that corresponds to the alpha-numeric
ratings of the global long- term rating scale.

13
Affiliate includes a parent, cooperative groups and significant investors (typically with a greater than 20 percent voting
interest). Government includes local, regional and national governments.
Rating Symbols and Definitions 25
 BCA Scale
aaa Issuers assessed aaa are judged to have the highest intrinsic, or standalone, financial strength, and thus subject to the
lowest level of credit risk absent any possibility of extraordinary support from an affiliate or a government.
aa Issuers assessed aa are judged to have high intrinsic, or standalone, financial strength, and thus subject to very low
credit risk absent any possibility of extraordinary support from an affiliate or a government.
a Issuers assessed a are judged to have upper-medium-grade intrinsic, or standalone, financial strength, and thus subject
to low credit risk absent any possibility of extraordinary support from an affiliate or a government.
baa Issuers assessed baa are judged to have medium-grade intrinsic, or standalone, financial strength, and thus subject to
moderate credit risk and, as such, may possess certain speculative credit elements absent any possibility of
extraordinary support from an affiliate or a government.
ba Issuers assessed ba are judged to have speculative intrinsic, or standalone, financial strength, and are subject to
substantial credit risk absent any possibility of extraordinary support from an affiliate or a government.
b Issuers assessed b are judged to have speculative intrinsic, or standalone, financial strength, and are subject to high
credit risk absent any possibility of extraordinary support from an affiliate or a government.
caa Issuers assessed caa are judged to have speculative intrinsic, or standalone, financial strength, and are subject to very
high credit risk absent any possibility of extraordinary support from an affiliate or a government.
ca Issuers assessed ca have highly speculative intrinsic, or standalone, financial strength, and are likely to be either in, or
very near, default, with some prospect for recovery of principal and interest; or, these issuers have avoided default or
are expected to avoid default through the provision of extraordinary support from an affiliate or a government.
c Issuers assessed c are typically in default, with little prospect for recovery of principal or interest; or, these issuers are
benefiting from a government or affiliate support but are likely to be liquidated over time; without support there would
be little prospect for recovery of principal or interest.

Note: Moody’s appends numerical modifiers 1, 2, and 3 to each generic assessment classification from aa through caa. The modifier 1 indicates
that the obligation ranks in the higher end of its generic assessment category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates a ranking in the lower end of that generic assessment category.

Carbon Transition Indicators

Carbon transition indicators (CTIs) are assigned to companies in certain sectors. CTIs are
scorecard-generated and use quantitative data and other indicators from issuers and third
parties to provide a transparent and objective starting point for our assessment of the credit risk
a company faces from carbon transition risk. CTIs inform the assignment of carbon transition
issuer category scores under our Environmental Issuer Profile Scores (E-IPSs).

Rating Symbols and Definitions 26

 Carbon Transition Indicator Scale

CT-1 Advanced Issuers typically have a business model that benefits from the transition to a
low-carbon economy.

CT-2-3 Strong Issuers typically have a business model that is not expected to be materially affected by the
carbon transition, or they have strategies and plans in place that substantially mitigate their
carbon transition exposure.

CT-4-5 Moderate Issuers typically have a business model that is subject to some exposure to carbon transition
risks and their relative positioning within this category is determined by variations in the
extent of their exposure to carbon risks, medium-term management actions and
long-term resilience.

CT-6-7-8 Challenged Issuers typically have a business model that is challenged, over the longer term, by the
transition to a low-carbon economy.

CT-9-10 Highly Challenged Issuers typically have a business model that is fundamentally inconsistent, over the longer
term, with the transition to a low-carbon economy.

Rating Symbols and Definitions 27

Counterparty Risk Assessments
Counterparty risk assessments (CR assessments) are opinions on the likelihood of a default by
an issuer on certain senior operating obligations and other contractual commitments. CR
assessments are assigned to legal entities in banking groups and, in some instances, other
regulated institutions with similar bank-like senior obligations. CR assessments address the
likelihood of default and do not take into consideration the expected severity of loss in the event
of default.
Obligations and commitments typically covered by CR assessments include payment obligations
associated with covered bonds (and certain other secured transactions), derivatives, letters of
credit, third party guarantees, servicing and trustee obligations and other similar operational
obligations that arise from a bank in performing its essential client-facing operating functions.
Long-term CR assessments reference obligations with an original maturity of eleven months or
more. Short-term CR assessments reference obligations with an original maturity of thirteen
months or less. CR assessments are expressed on alpha-numeric scales that correspond to the
alpha-numeric ratings of the global long-term and short-term rating scales, with a “(cr)” modifier
appended to the CR assessment symbols to differentiate them from our credit ratings.

CR Assessment Long-Term Scale

Aaa(cr) Issuers assessed Aaa(cr) are judged to be of the highest quality, subject to the lowest level of risk of defaulting on
certain senior operating obligations and other contractual commitments.

Aa(cr) Issuers assessed Aa(cr) are judged to be of high quality and are subject to very low risk of defaulting on certain
senior operating obligations and other contractual commitments.

A(cr) Issuers assessed A(cr) are judged to be upper-medium grade and are subject to low risk of defaulting on certain
senior operating obligations and other contractual commitments.

Baa(cr) Issuers assessed Baa(cr) are judged to be medium-grade and subject to moderate risk of defaulting on certain senior
operating obligations and other contractual commitments and as such may possess certain speculative
characteristics.

Ba(cr) Issuers assessed Ba(cr) are judged to be speculative and are subject to substantial risk of defaulting on certain
senior operating obligations and other contractual commitments.

B(cr) Issuers assessed B(cr) are considered speculative and are subject to high risk of defaulting on certain senior
operating obligations and other contractual commitments.

Caa(cr) Issuers assessed Caa(cr) are judged to be speculative of poor standing and are subject to very high risk of defaulting
on certain senior operating obligations and other contractual commitments.

Ca(cr) Issuers assessed Ca(cr) are highly speculative and are likely in, or very near, default on certain senior operating
obligations and other contractual commitments.

C(cr) Issuers assessed C(cr) are the lowest rated and are typically in default on certain senior operating obligations and
other contractual commitments.

Note: Moody’s appends numerical modifiers 1, 2, and 3 to each generic assessment classification from Aa(cr) through Caa(cr). The modifier 1
indicates that the issuer ranks in the higher end of its generic assessment category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates a ranking in the lower end of that generic assessment category.

Rating Symbols and Definitions 28

 CR Assessment Short-Term Scale

P-1(cr) Issuers assessed Prime-1(cr) have a superior ability to honor short-term operating obligations.

P-2(cr) Issuers assessed Prime-2(cr) have a strong ability to honor short-term operating obligations.

P-3(cr) Issuers assessed Prime-3(cr) have an acceptable ability to honor short-term operating obligations.

NP(cr) Issuers assessed Not Prime(cr) do not fall within any of the Prime rating categories.

Country Ceilings
Moody’s assigns long-term foreign and local currency ceilings to countries, expressed on the
alphanumeric global long-term rating scale. Ceilings apply to the ratings of non-sovereign issuers,
debt obligations, transactions and deposits in a country and facilitate the assignment of local
and foreign currency ratings for bonds, other debt and debt-like obligations and deposits of
locally domiciled issuers and obligors, including locally originated structured finance
transactions.
Country ceilings reflect the non-diversifiable risk incurred by investors in any sovereign credit
environment. For depositors, these risks affect the likelihood of being able to access deposits at
any time and in their full amount. A local currency country ceiling reflects the general country-
level risks that affect all local currency issues of locally domiciled obligors or structured finance
transactions whose cash flows are primarily generated from domestic assets or residents. A
foreign currency country ceiling builds in the transfer and convertibility risks that are incremental
to the general country-level risks reflected in local currency country ceilings. Local currency
country ceilings are relevant to obligations denominated in the currency of the country of
domicile or origination. Foreign currency country ceilings are relevant to obligations denominated
in a different currency than the currency of the country of domicile or origination.
Country ceilings indicate the highest rating level that Moody’s generally assigns to the financially
strongest issuers domiciled in a country, including the strongest structured finance transactions
whose cash flows are generated predominantly from domestic assets or residents. In other
words, ceilings generally act as a cap on ratings for locally domiciled issuers and locally
originated structured finance transactions. Notwithstanding the foregoing, obligations benefiting
from meaningful support mechanisms, assets or cash flows based outside the country may on
occasion be rated higher than the country ceiling. Applied to deposits, local and foreign ceilings
indicate the highest rating level that Moody’s generally assigns to deposit obligations of domestic
and foreign branches of banks headquartered in that domicile (including local subsidiaries of
foreign banks), while foreign currency ceilings also apply to the branches of foreign banks
operating in that domicile.
Ceilings apply to long-term and short-term obligations. The short-term ceiling equivalent can be
inferred from the alphanumeric level of the country ceiling. The mapping of short-term ceiling
equivalents is the same as the mapping of short-term ratings from long-term ratings. 14

14
Please see the table showing standard linkage between the global long-term and short-term rating scales in this
document.
Rating Symbols and Definitions 29
Credit Estimates
A Credit Estimate (CE) is an unpublished point-in-time opinion of the approximate credit quality
of individual securities, financial contracts, issuers, corporate families or loans. CEs are not
Moody’s Credit Ratings and are not assigned by rating committees. Had Moody’s conducted an
analysis commensurate with a full Moody’s Credit Rating, the result may have been significantly
different. Additionally, CEs are not monitored but may be refreshed as needed.
CEs are widely used in the process of assessing elements of credit risk in transactions for which
a traditional Moody’s Credit Rating is to be determined. CEs are provided in the context of
granular pools (where no one obligor represents an exposure of more than 3% of the total pool),
chunky pools (where individual exposures represent 3% or more of the total pool) or single-name
exposures.
CEs are typically assigned based on an analysis that uses public information (which at times may
be limited) or information supplied by various third parties and usually does not involve any
participation from the underlying obligor.
CEs are not expressed through the use of Moody’s traditional 21-point, Aaa-C alphanumeric long-
term rating scale; rather, they are expressed on a simple numerical 1-21 scale. They are calibrated,
however, to be broadly comparable to Moody’s alphanumeric rating scale and Moody’s Rating
Factors, which are used in CDO analysis.

Rating Symbols and Definitions 30

ESG Issuer Profile Scores
Environmental (E), Social (S) and Governance (G) Issuer Profile Scores (E, S and G IPS) are
opinions of an issuer or transaction’s exposure to E, S and G considerations. The IPS incorporate
meaningful mitigating or strengthening actions related to those specific exposures.

E, S and G Issuer Profile Scoring Scale

E-1 S-1 G-1 Issuers or transactions with an issuer profile score of 1 typically have exposures to E or S issues that carry
material credit benefits. For G, issuers or transactions typically have exposure to G considerations that, in
the context of their sector, positions them strongly, with material credit benefits.

E-2 S-2 G-2 Issuers or transactions with an issuer profile score of 2 typically have exposures to E or S issues that are
not material in differentiating credit quality. In other words, they could be overall slightly credit-positive,
credit neutral, or slightly credit-negative. An issuer or transaction may have a IPS score of 2 because the
exposure is not material or because there are mitigants specifically related to any E or S risks that are
sufficient to offset those risks. Issuers or transactions with an issuer profile score of 2 typically have
exposure to G considerations that, in the context of their sector, positions them as average, and the
exposure is overall neither credit-positive nor negative.

E-3 S-3 G-3 Issuers or transactions with an issuer profile score of 3 typically have moderate credit exposures to E or S
risks. These issuers may demonstrate some mitigants specifically related to the identified E or S risks, but
they are not sufficiently material to fully offset the risks. Issuers or transactions with an issuer profile score
of 3 typically have moderate credit exposure to G risks that, in the context of the sector, positions them
below average.

E-4 S-4 G-4 Issuers or transactions with an issuer profile score of 4 typically have high credit exposures to E or S risks.
These issuers may demonstrate some mitigants specifically tied to the E or S risks identified, but they
generally have limited effect on the risks. Issuers or transactions with an issuer profile score of 4 typically
have high credit exposure to G risks that, in the context of their sector, positions them more weakly than
issuers with an issuer profile score of 3.

E-5 S-5 G-5 Issuers or transactions with an issuer profile score of 5 typically have very high credit exposures to E or S
risks. While these issuers or transactions may demonstrate some mitigants specifically related to the
identified E or S risks, they are not meaningful relative to the magnitude of the risks. Issuers or transactions
with an issuer profile score of 5 typically have very high credit exposure to G risks that in the context of
their sector, positions them more weakly than issuers with an issuer profile score of 4.

Rating Symbols and Definitions 31

Loss Given Default Assessments
Moody’s Loss Given Default (LGD) assessments are point-in-time opinions for a non-structured
finance security about expected loss given default expressed as a percent of principal and
accrued interest at the resolution of the default. 15 LGD assessments are assigned to individual
loan, bond, and preferred stock issues. The firm-wide or enterprise expected LGD rate generally
approximates a weighted average of the expected LGD rates on the firm’s liabilities (excluding
preferred stock), where the weights equal each obligation’s expected share of the total liabilities
at default. LGD assessments are typically updated when there are material changes to a
company’s capital structure or at the time of a Credit Rating Action.

LGD Assessment Scale

Assessments Loss range

LGD1 ≥ 0% and < 10%

LGD2 ≥ 10% and < 30%

LGD3 ≥ 30% and < 50%

LGD4 ≥ 50% and < 70%

LGD5 ≥ 70% and < 90%

LGD6 ≥ 90% and ≤ 100%

Q-scores
Q-scores are assessments that are scorecard generated, unpublished, point-in-time estimates of
the approximate credit quality of sub-sovereign entities globally (such as states, regions,
provinces, territories, counties, cities and closely related entities). Depending on circumstances,
these can be for an individual sub-sovereign entity or sector-wide assessments. Q-scores assist
in the analysis of mean portfolio credit risk and represent the distribution of credit risk from the
underlying exposures in a large pool. 16 Q-scores are not equivalent to and do not represent
traditional Moody’s Credit Ratings and are not assigned by a rating committee. Q-scores are not
expressed through the use of Moody’s traditional 21-point, Aaa-C alphanumeric long-term rating
scale; rather, they are expressed on a numerical 1.q-21.q scale.

15
The expected LGD rate is 100% minus the expected value that will be received at default resolution, discounted by the
coupon rate back to the date the last debt service payment was made, and divided by the principal outstanding at the
date of the last debt service payment.
16
There may be instances in which the pool is not large but the Q-score represents a small portion of the transaction.
Rating Symbols and Definitions 32
Speculative Grade Liquidity Ratings
Moody’s Speculative Grade Liquidity Ratings are opinions of an issuer’s relative ability to
generate cash from internal resources and the availability of external sources of committed
financing, in relation to its cash obligations over the coming 12 months. Speculative Grade
Liquidity Ratings will consider the likelihood that committed sources of financing will remain
available. Other forms of liquidity support will be evaluated and consideration will be given to the
likelihood that these sources will be available during the coming 12 months. Speculative Grade
Liquidity Ratings are assigned to speculative grade issuers that are by definition Not
Prime issuers.

SGL Rating Scale

SGL-1 Issuers rated SGL-1 possess very good liquidity. They are most likely to have the capacity to meet their obligations
over the coming 12 months through internal resources without relying on external sources of committed financing.

SGL-2 Issuers rated SGL-2 possess good liquidity. They are likely to meet their obligations over the coming 12 months
through internal resources but may rely on external sources of committed financing. The issuer’s ability to access
committed sources of financing is highly likely based on Moody’s evaluation of near-term covenant compliance.

SGL-3 Issuers rated SGL-3 possess adequate liquidity. They are expected to rely on external sources of committed
financing. Based on its evaluation of near-term covenant compliance, Moody’s believes there is only a modest
cushion, and the issuer may require covenant relief in order to maintain orderly access to funding lines.

SGL-4 Issuers rated SGL-4 possess weak liquidity. They rely on external sources of financing and the availability of that
financing is, in Moody’s opinion, highly uncertain.

Structured Credit Assessments (SCAs)

Structured Credit Assessments (SCAs) are opinions of the relative credit quality of financial
obligations that are collateral assets within securitizations. SCAs incorporate the credit
implications of structural features of the securitization that are not intrinsic to the obligation,
such as servicing, liquidity arrangements and tail periods. 17 In contrast, credit ratings on these
same instruments do not reflect these structural features, as they would not be available to
investors that invest in these assets directly outside of the securitization’s structure.
Structured Credit Assessments are opinions of the expected loss associated with the financial
obligation in the context of the corresponding securitization transaction and are expressed, with
the sca indicator, on a lower-case alpha-numeric scale that corresponds to the alpha-numeric
ratings of the global long- term rating scale.

17
Structural features of securitisations often include: servicing of the loans by third party experts, liquidity arrangements
to mitigate specific risks or the risk of short term cash flow interruptions, and tail periods between the loan maturity
date and the loss calculation date to allow for an orderly sale of the assets upon default.
Rating Symbols and Definitions 33
 SCA Scale

aaa (sca) Financial obligations assessed aaa (sca) are judged to have the highest credit quality and thus subject to the
lowest credit risk, when used as inputs in determining a structured finance transaction’s rating.

aa (sca) Financial obligations assessed aa (sca) are judged to have high credit quality and thus subject to very low credit
risk, when used as inputs in determining a structured finance transaction’s rating.

a (sca) Financial obligations assessed a (sca) are judged to have upper-medium credit quality and thus subject to low
credit risk, when used as inputs in determining a structured finance transaction’s rating.

baa (sca) Financial obligations assessed baa (sca) are judged to have medium-grade credit quality and thus subject to
moderate credit risk, and as such, may possess certain speculative credit elements, when used as inputs in
determining a structured finance transaction’s rating.

ba (sca) Financial obligations assessed ba (sca) are judged to have speculative credit quality and subject to substantial
credit risk, when used as inputs in determining a structured finance transaction’s rating.

b (sca) Financial obligations assessed b (sca) are judged to have speculative credit quality and subject to high credit risk,
when used as inputs in determining a structured finance transaction’s rating.

caa (sca) Financial obligations assessed caa (sca) are judged to have speculative credit quality and subject to very high
credit risk, when used as inputs in determining a structured finance transaction’s rating.

ca (sca) Financial obligations assessed ca (sca) are judged to be highly speculative and are likely to be either in, or very
near, default, with some prospect for recovery of principal or interest, when used as inputs in determining a
structured finance transaction’s rating.

c (sca) Financial obligations assessed c (sca) are typically in default with little prospect for recovery of principal or
interest, when used as inputs in determining a structured finance transaction’s rating.

Notes:
1. Moody’s appends numerical modifiers 1, 2, and 3 to each generic assessment classification from aa (sca) through caa (sca).
The modifier 1 indicates that the obligation ranks in the higher end of its generic assessment category; the modifier 2 indicates a mid-
range ranking; and the modifier 3 indicates a ranking in the lower end of that generic assessment category.
2. The modifier pd indicates a probability of default structured credit assessment (for example aaa (sca.pd)). A probability of default
structured credit assessment is an opinion of the relative likelihood that the financial instrument will default.

Timely Payment Indicator (TPI)

A Timely Payment Indicator is an assessment of the likelihood of timely payment of interest and
principal to covered bondholders following a covered bond anchor event. TPIs are assessed as
Very High, High, Probable-High, Probable, Improbable or Very Improbable.

Rating Symbols and Definitions 34

Other Definitions
ESG Credit Impact Scores
ESG credit impact scores (CISs) communicate the impact of ESG considerations on the rating of
an issuer or transaction. The CIS is based on Moody’s qualitative assessment of the impact of
ESG considerations in the context of the issuer’s or transaction’s other credit drivers that are
material to a given rating.

ESG Credit Impact Score Scale

CIS-1 ESG considerations have a positive impact on the current rating which is higher than it would have been in the
absence of ESG considerations.

CIS-2 ESG considerations do not have a material impact on the current rating.

CIS-3 ESG considerations have a limited impact on the current rating, with potential for greater negative impact
over time.

CIS-4 ESG considerations have a discernible impact on the current rating, which is lower than it would have been if
ESG risks did not exist. The negative impact of ESG considerations on the rating is higher than for an issuer
scored CIS-3.

CIS-5 ESG considerations have a pronounced impact on the current rating, which is lower than it would have been if
ESG risks did not exist. The negative impact of ESG considerations on the rating is higher than for an issuer
scored CIS-4.

Rating Outlooks
A Moody’s rating outlook is an opinion regarding the likely rating direction over the medium term.
Rating outlooks fall into four categories: Positive (POS), Negative (NEG), Stable (STA), and
Developing (DEV). Outlooks may be assigned at the issuer level or at the rating level. Where there
is an outlook at the issuer level and the issuer has multiple ratings with differing outlooks, an
“(m)” modifier to indicate multiple will be displayed and Moody’s press releases will describe and
provide the rationale for these differences. A designation of RUR (Rating(s) Under Review) is
typically used when an issuer has one or more ratings under review, which overrides the outlook
designation. A designation of RWR (Rating(s) Withdrawn) indicates that an issuer has no active
ratings to which an outlook is applicable. Rating outlooks are not assigned to all rated entities or
obligations. In some cases, this will be indicated by the display NOO (No Outlook).
A stable outlook indicates a low likelihood of a rating change over the medium term. A negative,
positive or developing outlook indicates a higher likelihood of a rating change over the medium
term. A rating committee that assigns an outlook of stable, negative, positive, or developing to an
issuer’s rating is also indicating its belief that the issuer’s credit profile is consistent with the
relevant rating level at that point in time.

Rating Symbols and Definitions 35

The time between the assignment of a new rating outlook and a subsequent rating action has
historically varied widely, depending upon the pace of new credit developments which materially
affect the issuer’s credit profile. On average, after the initial assignment of a positive or negative
rating outlook, the next rating action – either a change in outlook, a rating review, or a change in
rating – has followed within about a year, but outlooks have also remained in place for much
shorter and much longer periods of time. Historically, approximately one-third of issuers have
been downgraded (upgraded) within 18 months of the assignment of a negative (positive) rating
outlook. After the initial assignment of a stable outlook, about 90% of ratings experience no
change in rating during the following year.

Rating Reviews
A review indicates that a rating is under consideration for a change in the near term. 18 A rating
can be placed on review for upgrade (UPG), downgrade (DNG), or more rarely with direction
uncertain (UNC). A review may end with a rating being upgraded, downgraded, or confirmed
without a change to the rating. Ratings on review are said to be on Moody’s “Watchlist” or “On
Watch”. Ratings are placed on review when a rating action may be warranted in the near term but
further information or analysis is needed to reach a decision on the need for a rating change or
the magnitude of the potential change.
The time between the origination of a rating review and its conclusion varies widely depending on
the reason for the review and the amount of time needed to obtain and analyze the information
relevant to make a rating determination. In some cases, the ability to conclude a review is
dependent on whether a specific event occurs, such as the completion of a corporate merger or
the execution of an amendment to a structured finance security. In these event-dependent cases
and other unique situations, reviews can sometimes last 90 to 180 days or even longer. For the
majority of reviews, however, where the conclusion of the review is not dependent on an event
whose timing Moody’s cannot control, reviews are typically concluded within 30 to 90 days.
Ratings on review for possible downgrade (upgrade) have historically concluded with a
downgrade (upgrade) over half of the time.

Confirmation of a Rating
A Confirmation is a public statement that a previously announced review of a rating has been
completed without a change to the rating.

Affirmation of a Rating
An Affirmation is a public statement that the current Credit Rating assigned to an issuer or debt
obligation, which is not currently under review, continues to be appropriately positioned. An
Affirmation is generally issued to communicate Moody’s opinion that a publicly visible credit
development does not have a direct impact on an outstanding rating.

Anticipated Ratings Process

The process by which a provisional notation may be removed from a Credit Rating assigned to an
instrument or issuer, when the applicable contingencies which were the basis for affixing the (P)
notation are deemed to have been fulfilled. For example, when a rating of (P)Baa1 is assigned to a
debt instrument, it is anticipated that the (P) notation will be removed from the Baa1 rating when
it is determined that the contingencies indicated by the (P) notation have been fulfilled.

18
Baseline Credit Assessments and Counterparty Risk Assessments may also be placed on review.
Rating Symbols and Definitions 36
Subsequent Ratings Process
The process of assigning Credit Ratings (together with the associated outlook or review status, if
applicable) that are derived exclusively by reference to an existing Credit Rating of a program,
series, category/class of debt or primary Rated Entity. This includes:
→ Assignment of a Credit Rating to issuance of debt within or under an existing rated program
where the transaction structure and terms have not changed in a manner that would affect
the Credit Rating indicated by the program rating (examples include covered bond programs,
shelf registrations, and medium term note programs);
→ Credit Ratings assigned based on the pass-through of a primary Rated Entity’s Credit Rating,
including monoline or guarantee linked ratings;
→ Assignment of Credit Ratings to debt instruments of the same seniority as previously rated
debt when such issuance of debt is contemplated in the existing Credit Ratings. Examples
include ratings on debt issued by frequent corporate and government issuers. This also
includes Credit Ratings assigned to new debts, new programs, or amended and extended
credit facilities by reference to an existing rating of the same debt class, at the same rating
level, whether or not the new debts or programs replace similarly structured debts, programs
or credit facilities.

Rating Agency Conditions (RACs)

Parties to a transaction sometimes choose to include clauses in the transaction documents that
require a party thereto to obtain an opinion from a rating agency that certain specified actions,
events, changes to the structure of, or amendments to the documentation of, the transaction will
not result in a reduction or withdrawal of the current rating maintained by that rating agency.
Such an opinion is referred to by Moody’s as a “RAC” and consists of a letter or other written
communication, such as a press release, from Moody’s issued after consideration of a request
that Moody’s provide a RAC. The decision to issue a RAC remains entirely within Moody’s
discretion, and Moody’s may choose not to provide a RAC even if the transaction documents
require it. When Moody’s chooses to issue a RAC, the RAC reflects Moody’s opinion solely that
the specified action, event, change in structure or amendment, in and of itself and as of that
point in time, will not result in a reduction, placement on review for possible downgrade or
withdrawal of Moody’s current rating on the debt. A RAC is not a “confirmation” or “affirmation”
of the rating, as those terms are defined elsewhere in this Rating Symbols and Definitions
publication, nor should it be interpreted as Moody’s “approval of” or “consent to” the RAC subject
matter.

Rating Symbols and Definitions 37

Definition of Default
Moody’s definition of default is applicable only to debt or debt- like obligations (e.g., swap
agreements). Four events constitute a debt default under Moody’s definition: 19
a. a missed or delayed disbursement of a contractually-obligated interest or principal payment 20
(excluding missed payments cured within a contractually allowed grace period), as defined in
credit agreements and indentures;
b. a bankruptcy filing or legal receivership by the debt issuer or obligor that will likely cause a
miss or delay in future contractually-obligated debt service payments;
c. a distressed exchange whereby 1) an issuer offers creditors a new or restructured debt, or a
new package of securities, cash or assets, that amount to a diminished value relative to the
debt obligation’s original promise and 2) the exchange has the effect of allowing the issuer to
avoid a likely eventual default; 21 and

d. a change in the payment terms of a credit agreement or indenture imposed by a third party
such as the sovereign that results in a diminished financial obligation, such as a forced
currency re-denomination or a forced change in some other aspect of the original promise,
such as indexation or maturity. 22

Moody’s definition of default does not include so-called “technical defaults,” such as maximum
leverage or minimum debt coverage violations, unless the obligor fails to cure the violation and
fails to honor the resulting debt acceleration which may be required.
Also excluded are payments owed on long-term debt obligations which are missed due to purely
technical or administrative reasons which are 1) not related to the ability or willingness to make
the payments and 2) are cured in very short order (typically, 1-2 business days after the
technical/administrative issue is recognized). 23 Finally, in select instances based on the facts and
circumstances, missed payments on financial contracts or claims may be excluded if they are the
result of legal disputes regarding the validity of those claims.
Moody’s will not view a contractually allowable deferral of interest payment as a default. If
however for a structured finance instrument the unpaid interest payment is not cured by maturity
(or for an instrument whose rating is withdrawn before maturity, if at the time of withdrawal the
payment is not cured nor expected to be cured by maturity) we will at that time consider it as a
default. Prior to maturity, if the non-payment of expected interest on a security persists for more

19
For certain covered bonds that give investors dual recourse against both the issuer and a guarantor of the issuer’s debt,
no event will constitute a debt default unless it occurs in relation to both the issuer’s obligations and the guarantor’s
obligations.
20
Such a non payment will be viewed as a default to the extent the amount exceeds a materiality threshold of $1,000 or
approximate equivalent in other currencies.
21
We include distressed exchanges in our definition of default in order to capture credit events whereby issuers
effectively fail to meet their expected debt service obligations but do not actually file for bankruptcy or miss an interest
or principal payment. Moody’s analyzes the likelihood of future default and considers various indicators in assessing
loss relative to the original promise, which may include the yield to maturity of the debt being exchanged.
22
Moreover, unlike a general tax on financial wealth, the imposition of a tax by a sovereign on the coupon or principal
payment on a specific class of government debt instruments (even if retroactive) would represent a default. Targeted
taxation on government securities would represent a default even if the government’s action were motivated by fairness
or other considerations, rather than inability or unwillingness to pay.
23
For the avoidance of doubt, payments missed due to reasons that are not purely technical or administrative, such as
payments missed due to potential failures of distributed ledger technology or as the result of sovereign political
sanctions, for example, do constitute defaults. For structured finance securities, Moody’s will not view a technical delay
in payments – such as due to a delay in transferring a servicer, swap provider, or account bank holder - as a default
unless (1) investors exercise remedies (like a debt acceleration) and the issuer fails to cure the delay and honor the
resulting debt acceleration or other remedy which may be required, or (2) the delay extends beyond three months.

Rating Symbols and Definitions 38

than 18 months in an amount that exceeds the materiality threshold defined in footnote 20, the
rating will be capped at Baa1 to reflect the increased uncertainty associated with the credit risk
of the security. This cap applies even if the expected loss on the security is estimated to be
lower than would be consistent with a rating of Baa1. If such an interest shortfall, together with
interest-on-interest for the period of the shortfall, is subsequently reduced below the materiality
threshold defined in footnote 20, then the rating will no longer be subject to the Baa1 cap.
Additionally, in some sectors non-payment of interest is defined as an Event of Default (EOD)
under the credit agreements or indenture, potentially triggering remedies like acceleration of the
debt. In these cases, a missed payment will be considered as a default, unless issuers in the
sector have a substantial record of not triggering remedies upon occurrence of such EOD, and we
expect the interest to eventually be repaid.
In some structured finance asset classes, the transaction documents provide for the principal
outstanding amount of a security to be reduced when such security is undercollateralized.
Moody’s views such reduction in principal (often called a write-down event) as a default. In other
cases, the transaction documents do not provide for the principal outstanding amount of a
security to be reduced when such security is undercollateralized; Moody’s views such
undercollateralization as a default if it remains uncured by the earlier of the maturity of the
instrument or the withdrawal of its rating.
Although some structured finance credit agreements and indentures do not mandate interest-on-
interest following non-payment of interest, our ratings address the economic loss associated with
such non-payment. Consequently the non-payment of interest-on-interest will result in a cap on
the ratings of such securities based on the length of the interest deferral period, as follows:

Interest Deferral Period Rating Cap

> 1 year Aa2

> 2 years A1

> 3 years A3

> 4 years Baa1

> 6 years Baa3

> 8 years Ba1

> 10 years Ba2

Rating Symbols and Definitions 39

Definition of Impairment
A security is impaired when investors receive — or expect to receive with near certainty — less
value than would be expected if the obligor were not experiencing financial distress or otherwise
prevented from making payments by a third party, even if the indenture or contractual agreement
does not provide the investor with a natural remedy for such events, such as the right to press for
bankruptcy.
Moody’s definition of impairment is applicable to preferred stock and other hybrid securities. A
security is deemed to be impaired upon the occurrence of:
a. contractually-allowable payment omissions of scheduled dividends, interest or principal
payments on preferred stock or other hybrid instruments; 24 or
b. write-downs or "impairment distressed exchanges" 25 of preferred stock or other hybrid
instruments due to financial distress whereby (1) the principal promise to an investor is
reduced according to the terms of the indenture or other governing agreement, 26 or (2) an
obligor offers investors a new or restructured security, or a new package of securities, cash or
assets and the exchange has the effect of allowing the obligor to avoid a contractually-
allowable payment omission as described in a) above. 27
The impairment status of a security may change over time as it migrates from impaired to cured
(e.g., if initially deferred cumulative preferred dividends are ultimately paid in full) and possibly
back again to impaired.

Definition of Loss-Given-Default
The loss-given-default rate for a non-structured finance security is 100% minus the value that is
received at default resolution (which may occur at a single point in time or accrue over an interval
of time), discounted by the coupon rate back to the date the last debt service payment was made,
divided by the principal outstanding at the date of the last debt service payment. For structured
finance securities that have defaulted, or are very likely to default, the loss given default is
calculated based on the higher of the current balance and the original balance of the security. In
some structured finance asset classes, the transaction documents provide for a write-down (see
Definition of Default section above). In these situations, the amount of such write-down 28 is
added to the loss given default of the security; thus, the loss given default reflects past and
expected future losses on the security.
In the special case of a distressed exchange default, when an investor is given new or modified
securities in exchange, the LGD rate is 100% minus the trading value of the new securities

24
Some instruments incorporate Payment in Kind (PIK) features to accommodate a cashflow profile which is irregular
such that regular payments are not expected and exercising the PIK option does not reliably imply credit stress. In this
context, the exercise of a PIK option will only be viewed as an impairment event to the extent that this reflects credit
stress and is instead of making a regular scheduled payment. Similar to default events, excluded from impairment
events are missed payments due to purely technical or administrative reasons which 1) are not related to the ability or
willingness to make the payments and 2) are remedied in very short order (typically, 1-2 business days after the
technical/administrative issue is recognized).
25
Impairment distressed exchanges are similar to default distressed exchanges except that they have the effect of
avoiding an impairment event, rather than a default event.
26
Once written down, complete cures, in which securities are written back up to their original balances are extraordinarily
rare; moreover, in most cases, a write-down of principal leads to an immediate and permanent loss of interest for
investors, since the balance against which interest is calculated has been reduced.
27
Examples of such impairments include mandatory conversions of contingent capital securities to common equity and
mandatory write-downs of other hybrid securities that are the direct result of obligor distress.
28
In some rare instances where there is no principal loss but an interest loss then the loss given default would be based
on the interest loss.
Rating Symbols and Definitions 40
received in exchange at the exchange date divided by the par value plus accrued interest of the
original securities as of the exchange date.

Long-Term Credit Ratings for Defaulted Debt Instruments or Impaired

Preferred Stocks or Hybrid Securities
When a debt instrument defaults or is very likely to default, or when a preferred stock or a hybrid
security becomes impaired, Moody’s rating on that instrument will reflect our expectations for
recovery of principal and interest, as well as the uncertainty around that expectation, as
summarized in the table below. 29 Given the usual high level of uncertainty around recovery rate
expectations, the table uses approximate expected recovery rates and is intended to present
approximate guidance rather than a rigid mapping.

Approximate Expected Recoveries Associated With Ratings

for Defaulted or Impaired Securities

Expected Recovery Rate Fundamental Structured Finance 30

99 to 100%* B1* B1 (sf)*

97 to 99%* B2* B2 (sf)*

95 to 97%* B3* B3 (sf)*

90 to 95% Caa1 Caa1 (sf)

80 to 90% Caa2 Caa2 (sf)

65 to 80% Caa3 Caa3 (sf)

35 to 65% Ca Ca (sf)

Less than 35% C C (sf)

* For instruments rated B1, B2, or B3, the uncertainty around expected recovery rates should also be low. For example, if a defaulted security has
a higher than a 10% chance of recovering less than 90%, it would generally be rated lower than B3.

Additionally, the table may not apply directly in a variety of unusual circumstances. For example,
a security in default where the default is likely to be fully cured over the short-term but which will
remain very risky over a longer horizon might be rated much lower than suggested by this table.
At the other end of the rating scale, very strong credits that experience temporary default or
impairment events with a very high expectation of imminent repayment might be rated higher
than B1 based on its expected loss.

29
The approach to impairment is consistent with the approach to default. When an instrument is impaired or very likely to
become impaired, the rating will reflect the expected loss relative to the value that was originally expected absent
financial distress.
30
See Definition of Default section above for further details.
Rating Symbols and Definitions 41
Securities in default where recovery rates are expected to be greater than 95% can be rated in the
B category as outlined in the table above. In order to be assigned a rating in the B category, the
confidence level regarding the expected recovery rates should also be high. Or in other words,
uncertainty should be low. As stated in the footnote within the table, if a security has a higher
than a 10% chance of recovering less than 90%, then it would generally be rated lower than B3.

Credit Rating Methodologies

Our credit rating methodologies describe the analytical framework rating committees use to
assign ratings. As set forth in the methodologies, they are not intended to present an exhaustive
treatment of all factors reflected in our ratings. Rather, they describe the key qualitative and
quantitative considerations that are usually most important for assessing credit risk in a given
sector. Each rating committee applies its own judgment in determining how to emphasize rating
factors.
Most of our credit rating methodologies focus on a particular industry sector or class of issuer or
transaction. These primary methodologies may incorporate similar industries, sectors or classes
that are not specifically cited. Primary methodologies have sufficient analytical flexibility that
collectively provide an analytical framework that can be used to assign ratings to almost any debt
instrument or debt issuer. Other methodologies describe our approach to analytical
considerations that aren’t specific to any single sector or class of issuer. These methodologies
are referred to as cross-sector methodologies, and they cover general credit-related topics and
are typically used in conjunction with primary methodologies to assign credit ratings.
Methodologies governing fundamental credits (e.g., non- financial corporates, financial
institutions and governments) generally (though not always) incorporate a scorecard. A scorecard
is a reference tool explaining the factors that are generally most important in assigning ratings. It
is a summary, and does not contain every rating consideration. The weights shown for each factor
and sub-factor in the scorecard represent an approximation of their typical importance for rating
decisions, but the actual importance of each factor may vary significantly depending on the
circumstances of the issuer and the environment in which it is operating. In addition, quantitative
factor and sub-factor variables generally use historical data, but our rating analyses are based on
forward- looking expectations. Each rating committee will apply its own judgment in determining
whether and how to emphasize rating factors which it considers to be of particular significance
given, for example, the prevailing operating environment. As a consequence, assigned ratings
may fall outside the range or level indicated by the scorecard.
Methodologies governing structured finance credits often mention one or more rating models. A
structured finance ratings model is a reference tool that explains how certain rating factors are
considered in estimating a loss distribution for the collateral assets, or how the interplay between
collateral cash flows, capital structure and credit enhancement jointly influence the credit risk of
different tranches of securities. While methodologies may contain fixed values for key model
parameters to be applied to transactions across an entire sector, individual rating committees are
expected to employ judgment in determining model inputs, and rating committee deliberations
may fall outside model-indicated outputs.
While most methodologies relate to a particular industry, sector or class of issuers or
transactions, a small number — cross-sector methodologies, many originally issued as ‘Rating
Implementation Guidance’ — have implications for a number of (and in some cases all) sectors.
Examples include the methodologies which govern:

Rating Symbols and Definitions 42

→ the assignment of short-term ratings across the Fundamental Group;
→ the use of credit estimates in the analysis of structured finance transactions;
→ the linkage between sovereign ratings and related ratings in other Fundamental Groups;
→ the ‘notching’ guidelines used to assign ratings to different classes of corporate debt;
→ and the determination of country ceilings.
Typically, these are broad commentaries, the output of which may be general guidance to
committees on ranges or caps on ratings rather than a specific rating assignment and which, to a
greater extent than sector-specific methodologies, set out broad principles and relationships
rather than detailed risk factors which can be summarized in a scorecard. However, in other
respects cross-sector methodologies are no different from any sector-specific methodology, in
providing an analytical framework to promote consistency rather than a set of rules which must
be applied rigidly in all circumstances.

Key Rating Assumptions

Methodologies may (but need not) contain separately identifiable key rating assumptions
(“KRAs”). KRAs are the fixed inputs (sometimes expressed as a possible range of values)
described in Credit Rating Methodologies such as mathematical or correlation assumptions
which are common to broad classes of ratings, may be common to multiple Credit Rating
Methodologies, and which inform rating committee judgments in assigning ratings across each
class. KRAs are considered methodological and are subject to the same governance process as
the methodology to which they relate, including the need for any changes to be approved by the
relevant Policy Committee within Moody’s.
KRAs are, by their nature, relatively stable inputs to the analytical process, and because they
seek to bring a degree of stability, consistency and transparency to something that may in
practice be uncertain, they are intended to be reasonably resilient to change. They may change
over time in response to long-term structural changes or as more is learned about long- run
relationships between risk factors, but they would be very unlikely to change as a result of a
short-run change in economic or financial market conditions.
By contrast, credit judgments reached in rating committees regarding the impact of prevailing
credit conditions on ratings within a particular sector, country or region are not KRAs, even where
those judgments affect a large number of Credit Ratings (for example because they alter a
country ceiling, systemic support indicator or a Timely Payment Indicator). Moreover, rating
committees will, from time to time, reach credit judgments in relation to the application of KRAs
in the assignment of credit ratings for a particular deal or set of deals which are the subject of
that rating committee, to reflect prevailing credit conditions in the relevant region or sub-sector
(for example to apply higher or lower correlation assumptions while a given set of credit
conditions persist). Such judgments would not be deemed to have amended a KRA, since they
were not intended to be applied consistently and systematically across most if not all debt
instruments covered by the relevant methodology, and in a manner which was largely insensitive
to further changes in credit conditions. Macro-economic or financial market projections which
are by definition specific to a particular point in time are not KRAs.

Rating Symbols and Definitions 43

For Structured Finance Credit Rating Methodologies, KRAs are generally assumptions that
underlie the overall methodological construct — values assigned to parameters which influence
the analysis of a prototypical transaction broadly across the relevant sector. Examples would
include:
→ sector correlation assumptions;
→ loss severity assumptions for particular sectors;
→ and idealized default rates when used as a proxy for collateral performance.
Inputs to the rating of structured finance transactions that result from credit judgments reached
by rating committees or which reflect analytic deliberations and that are not KRAs include, for
example:
→ the credit risk considerations (as reflected in credit ratings or other credit assessments)
introduced by third parties, such as guarantors and other support providers, servicers, trust
banks, swap providers, etc.;
→ the credit risk introduced by the issuer’s operating environment, as reflected, for example, by
country ceilings;
→ changes in collateral asset risk expectations brought on by changes in the economic
environment; and
→ the maximum extent to which a bank’s legal and operating environment would enable
overcollateralization to provide lift for a covered bond’s rating over the bank’s own rating, as
expressed in the Timely Payment Indicator.
For Fundamental Credit Rating Methodologies, KRAs are intrinsically less common (in part
reflecting the less quantitative nature of Fundamental credit analysis), and where they do exist
they may be embedded within the underlying Credit Rating Methodology. Generally, they are so
deeply embedded in the overlying analytical structure that it would be meaningless and
misleading to identify them as distinct from the Credit Rating Methodology itself: a KRA change
would almost inevitably involve a corresponding change to the Credit Rating Methodology itself.
Examples of deeply embedded KRAs in Fundamental that cannot be viewed distinctly from a
Credit Rating Methodology include:
→ the assumption that leverage and access to liquidity are strong drivers of credit risk and
appropriate factors to include in Credit Rating Methodologies;
→ the assumptions that there is very strong interdependence between bank and sovereign
credit strength (from which Moody’s concludes that a lower-rated sovereign cannot generally
provide ratings lift through support to a higher rated bank);
→ the assumption that legal priority of claim affects average recovery on different classes of
debt sufficiently to warrant higher or lower ratings for different classes of debt;
→ and the assumption that sovereign credit risk is strongly correlated with that of other
domestic issuers.
Examples of assumptions in Fundamental Credit Rating Methodologies that would be considered
KRAs distinct from (though perhaps stated in) the Credit Rating Methodology to which each
relates would include:
→ loss severity assumptions for different sectors;
→ and idealized loss rates when used as a proxy for the ability of a sovereign to support its
banking system;

Rating Symbols and Definitions 44

Inputs to the fundamental ratings process that result from credit judgments reached by rating
committees or which reflect analytic deliberations which are not KRAs include:
→ the credit risk considerations (as reflected in credit ratings or other credit assessments)
introduced by third parties, such as guarantors and other support providers or affiliates;
→ the credit risk introduced by the issuer’s operating environment, as reflected, for example, by
country ceilings; and
→ the ability a sovereign to provide support to, for example, banks, as expressed in a systemic
support indicator.
→ Such inputs may incorporate underlying assumptions which may be KRAs.

Benchmark Parameters Used in Rating Models

As indicated in our rating definitions, Moody’s credit ratings are opinions of ordinal, horizon-free
credit risk and, as such, do not target specific default rates or expected loss rates. Moody’s
believes the needs of market participants are best served by ratings that are assessments of
relative credit risk rather than cardinal risk measures. If ratings targeted specific default and loss
rates, this would likely require frequent wide-spread rating actions in anticipation of economic
and market changes that might broadly push default and loss rates sharply higher or lower for a
brief period of time. Due to the inherent volatility of general credit and market conditions, most
such rating changes would likely soon need to be reversed. Therefore, the use of cardinal targets
would result in much higher rating volatility and disruption for investors without meaningfully
improving the cardinal predictive power of ratings over medium and long-term horizons.
To rate some obligations in some asset classes, however, Moody’s uses models and tools that
require ratings to be associated with cardinal default rates, expected loss rates, and internal
rates of return in order for those models and tools to generate outputs that can be considered in
the rating process. For these purposes, Moody’s has established a fixed common set of default
rates, expected loss rates, and internal rates of return that vary by rating category and/or
investment horizon (Moody’s Idealized Default and Expected Loss Rates; 31 hereafter called
“Moody’s Idealized Rates”). By using a common fixed set of benchmark parameters, rating
models are more likely to provide consistency with respect to the estimation of relative risk
across rating levels and investment horizons and can be more easily compared to one another.
Moody’s Idealized Rates are used with other tools and assumptions that have a combined effect
on model outcomes. While cardinal measures are used as inputs to models, the performance of
ratings is benchmarked against other metrics. 32 Although Moody’s Idealized Rates bore some
degree of relationship to corporate default and loss experience at the time they were created,
that relationship has varied over time, and Moody’s continuing use of the Idealized Rates for
modeling purposes does not depend on the strength of that relationship over any particular time
horizon. When we perceive changes in risk that necessitate changes in our credit analysis, we
make revisions to key assumptions and other aspects of models and tools rather than changing

31
These tables are highly stylized and are not intended to match historical or future ratings performance. The tables were
constructed in 1989 with reference to corporate default and loss experience over four historical data points. In
particular, the 10-year idealized default rates for A2, Baa2, Ba2, and B2 were set equal to the 10-year historical default
rates for corporate issuers with single A, Baa, Ba, and single B ratings, as observed between 1970 and 1989. In contrast,
the 10-year idealized default rates for Aaa and Aa2 were set lower than their historical default rates. All the other
idealized default rates – for different alphanumeric ratings and at different rating horizons – were derived through
interpolation rather than being matched to historical data. The idealized expected loss table was then derived by
multiplying each element of the idealized default table by an average loss severity assumption, set equal to the
approximate historical recovery rate of senior unsecured debt observed between 1970 and 1989. Moody’s has not
published a revised version of these tables since the 1989 version, and has no plans to revise them at the time of this
writing.
32
Moody’s approach to measuring ratings performance is discussed in “Measuring The Performance Of Credit Ratings”
(Moody’s Special Comment, November 2011).
Rating Symbols and Definitions 45
this fixed common set of benchmark parameters. This approach enables us to make adjustments
that only affect the particular sectors and asset classes we expect will experience significant
changes in risk at a given time.

Idealized Probabilities of Default and Expected Losses

For some obligations and asset classes we may use benchmark default probabilities and
expected loss rates in our rating models and tools. These rates are shown in the Idealized
Cumulative Expected Default Rates table and the Idealized Cumulative Expected Loss Rates
table, which can be found here: Moody’s Idealized Default and Loss Rates.
The tables can be used into two ways: (1) to suggest benchmark expected default and loss rates
for modelling the credit risk of a securitization’s collateral assets or the risk that a rated-
counterparty will fail to perform a role, and (2) to associate different modelled expected loss rates
with different benchmark ratings. Please consult Moody’s published credit rating methodologies
for details.

Internal Rate of Return (IRR) Reduction

For some obligations and asset classes we may use benchmark reductions of the internal rate of
return (IRR) to associate different modelled internal rates of return reductions with different
benchmark ratings. Please consult Moody’s published credit rating methodologies for details.
The table of these benchmarks can be found here: Moody’s IRR Reduction Rates. This table was
derived from Moody’s Idealized Rates, which can be found here: Moody’s Idealized Cumulative
Expected Default and Loss Rates.

Rating Symbols and Definitions 46

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Rating Symbols and Definitions 47