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Credit ratings

Information that can assist in assessing the risk of a bond.

What is a credit rating?

A credit rating is an assessment of a borrower’s credit worthiness, or their ability to repay a debt or their likelihood of defaulting.  Independent bodies known as credit rating agencies assess borrowers to determine their credit rating.

Credit ratings may indicate to an investor the relative risk of investing in a bond or hybrid security. Generally, the lower the credit rating, the greater the risk to the investor.

Assigning credit ratings

The credit ratings assigned by Australia Ratings on selected securities are their opinion of the creditworthiness of the issuer of the security.

It follows an alphabetical indicator of ‘AAA’, ‘AA’, ‘A’, ‘BBB’ etc., with 'AAA' being the highest possible rating.

The PCI scale and definitions used by Australian Ratings.

Product Complexity Indicator (PCI)

This colour coded indicator is based on the complexity and terms and conditions of a security.