Ratings  Ratings are evaluations providing an indication of the quality of the issuers of securities (countries, companies or banks) or the securities themselves (e.g. funds). Independent ratings agencies assess debtors’ creditworthiness based on defined criteria. The rating provides investors with information about the probability of an issuer repaying the capital borrowed and paying the interest due. provide an indication of the quality of bonds  A bond is a security that generates interest for investors. In addition to entitlement to payment of the agreed interest, bond holders – the creditors – also have the right to repayment of their capital. A government bond is issued by a state. The state, the Swiss Confederation for example, is the issuer of the bond and therefore also the debtor. issuers  Issuers issue securities, such as shares or bonds. They can be either states or companies seeking to raise capital. (countries or companies). Independent ratings agencies assess debtors  The debtor is a natural person or legal entity that owes the other party, the creditor, something. If you buy a corporate bond, for example, you are the creditor and the company is the debtor.’ creditworthiness  The creditworthiness of a debtor (e.g. states, companies, etc.) is their ability to repay a loan and the likelihood of them actually doing so. In the case of bond issuers, creditworthiness provides information on their ability to repay investors their capital including interest. This is often expressed as a rating. based on defined criteria. The rating provides investors with information about the probability of an issuer repaying the capital obtained and paying the interest  Interest, also known as coupon in relation to bonds, is not dependent on earnings before tax and is normally paid out once a year. due.

The three largest and most well-known ratings agencies  Ratings are evaluations providing an indication of the quality of the issuers of securities (countries, companies or banks) or the securities themselves (e.g. funds). Independent ratings agencies assess debtors’ creditworthiness based on defined criteria. The rating provides investors with information about the probability of an issuer repaying the capital borrowed and paying the interest due. are Fitch, Moody’s and Standard & Poor’s. All three of these US agencies carry out ratings analyses for countries and companies all over the world. However, there are also smaller, regional ratings agencies. Standard ratings and scales are used to compare the ratings of different countries and companies. Banks also have their own ratings systems which they use to evaluate borrowers. And banks themselves are of course also subject to agencies’ rating processes. Ratings are regularly assessed and updated based on the latest events and developments in the market and global economy.

The ratings are expressed in letter combinations, a bit like school grades. The ratings scale goes from “AAA” – the best rating representing the lowest risk – to “C” or even “D”. The symbols “+” or “-” or numbers are sometimes added to the letters: “A+” is therefore better than “A-”, and “A1” is better than “A3”. Generally, ratings with one or more “A”s signify a secure investment, “B” designates investments that are speculative or just below average and one or more “C” or “D” means that defaults can be anticipated.

Ratings inform investors of the risk they are assuming when making an investment. The greater the risk, the higher the return – or interest, in the case of bonds  A bond is a security that generates interest for investors. In addition to entitlement to payment of the agreed interest, bond holders – the creditors – also have the right to repayment of their capital. A government bond is issued by a state. The state, the Swiss Confederation for example, is the issuer of the bond and therefore also the debtor. – that can usually be expected. Of course, this means that there is also a higher risk of the country or company you have invested in not being able to repay your capital. If an issuer’s rating is poor, i.e. below “BBB”, then an investment is speculative. Such cases are also referred to as high yield bonds or junk bonds. A “BBB” rating indicates an investment-grade loan. These have good creditworthiness.

Switzerland – for example – has an “AAA” rating with all three major agencies – Fitch, Moody’s and Standard & Poor’s.