Standard and Poors (S&P) is one of the main ratings agencies, alongside Moody’s and Fitch. They are collectively known as the ‘big three’, and are used worldwide to determine the creditworthiness of bonds and other securities. Standard and Poors is also known for publishing the S&P500, the best known general measure of the American equity market, an index with the 500 largest US companies by market capitalisation.
S&P is one of three main providers of credit ratings, which they offer for a wide range of domestic and international bonds. These ratings run from AAA to D, with + or – symbols to indicate borderline cases. AAA represents the most creditworthy debt, such as short-term treasury bills, whilst a bond with a rating of D would be in default. Bonds rated BBB or above (AAA, AA, A and BBB, including any with +/-, are considered investment grade, while those rated BB or below (BB, B, CCC, CC, C and D) are considered ‘speculative’ – or in the market, junk bonds.
The other best known activity of Standard and Poors is publishing the S&P500, an equity index made up of the largest 500 US companies by market capitalisation. S&P500 tracking funds are some of the most popular passive investment products available, so inclusion or exclusion in the list is a matter of the utmost importance to the businesses concerned.
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