FOREIGN CURRENCY RATINGS
Foreign currency ratings refer to an entity’s ability and willingness to meet its foreign currency denominated financial obligations as they come due. Foreign currency ratings take into account the likelihood of a government imposing restrictions on the conversion of local currency to foreign currency or on the transfer of foreign currency to residents and non-residents.
Foreign currency ratings take into account the economic, financial and country risks that may affect creditworthiness as well as the likelihood that an entity would receive external support in the event of financial difficulties.
Ratings assigned to banks and corporates are generally not higher than the local and foreign currency ratings assigned by CI to the relevant sovereign government. However, it may be possible for an issuer with particular strengths and attributes such as inherent financial strength, geographically diversified cash flow, significant foreign assets, and guaranteed external support, to be rated above the sovereign.
The following rating scale applies to both foreign currency and local currency ratings. Short-term ratings assess the time period up to one year.
Foreign Currency Long-term Ratings
Investment Grade
AAA - The highest credit quality. Exceptional capacity for timely fulfilment of financial obligations and most unlikely to be affected by any foreseeable adversity. Extremely strong financial condition and very positive non-financial factors.
AA - Very high quality. Very strong capacity for timely fulfilment of financial obligations. Unlikely to have repayment problems over the long term and unquestioned over the short and medium terms. Adverse changes in business, economic and financial conditions unlikely to affect the institution significantly.
A - High credit quality. Strong capacity for timely fulfilment of financial obligations. Possesses many favourable credit characteristics but may be vulnerable slightly to adverse changes in business, economic and financial conditions.
BBB - Good credit quality. Satisfactory capacity for timely fulfilment of financial obligations. Acceptable credit characteristics but some vulnerability to adverse changes in business, economic and financial conditions. Medium grade credit characteristics and the lowest investment grade category.
Speculative Grade
BB - Speculative credit quality. Capacity for timely fulfilment of financial obligations vulnerable to adverse changes in internal or external circumstances. Financial and/or non-financial factors do not provide significant safeguard and the possibility of investment risk may develop.
B - Significant credit risk. Capacity for timely fulfilment of financial obligations very vulnerable to adverse changes in internal or external circumstances. Financial and/or non-financial factors provide weak protection; high probability for investment risk exists.
C - Substantial credit risk is apparent and the likelihood of default is high. Considerable uncertainty as to timely repayment of financial obligations. Credit is of poor standing with financial and/or non-financial factors providing little protection.
RS - Regulatory supervision (this rating is assigned to financial institutions only). The obligor is under the regulatory supervision of the authorities due to its weak financial condition. The likelihood of default is extremely high without continued external support.
SD - Selective default. The obligor has failed to service one or more financial obligations but CI believes that the default will be restricted in scope and that the obligor will continue honouring other financial commitments in a timely manner.
D - The obligor has defaulted on all, or nearly all, of its financial obligations.
Foreign Currency Short-term Ratings
Investment Grade
A1 - Superior credit quality. Highest capacity for timely repayment of short-term financial obligations that is extremely unlikely to be affected by unexpected adversities. Institutions with a particularly strong credit profile have a “+” affixed to the rating.
A2 - Very strong capacity for timely repayment but may be affected slightly by unexpected adversities.
A3 - Strong capacity for timely repayment that may be affected by unexpected adversities.
Speculative Grade
B - Adequate capacity for timely repayment that could be seriously affected by unexpected adversities.
C - Inadequate capacity for timely repayment if unexpected adversities are encountered in the short term.
RS - Regulatory supervision (this rating is assigned to financial institutions only). The obligor is under the regulatory supervision of the authorities due to its weak financial condition. The likelihood of default is extremely high without continued external support.
SD - Selective default. The obligor has failed to service one or more financial obligations but CI believes that the default will be restricted in scope and that the obligor will continue honouring other financial commitments in a timely manner.
D - The obligor has defaulted on all, or nearly all, of its financial obligations.
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