Posted in Finance, Accounting and Economics Terms, Total Reads: 1084
There are various ratings assigned to the investment opportunities in companies or for any security by credit rating companies. A-/A3 is generally the third or the fourth highest rating given by the rating companies in terms of the investment attractiveness. The credit ratings groups their ratings in three grades namely investment grade, neutral and junk grade.
A-/A3 generally comes as the last rating in the investment grade. Investment grade refers to high attractiveness ratings among the rating companies. A top rating in investment grade generally refers to the best avenue for investment although this might not be true as is evident from the subprime crisis. It is the discretion of rating companies behind the ratings if various securities.
A-/A3 refers to a fairly stable issuer with relatively low default risk. The ratings are mainly based on the creditworthiness of the issuer. Some of the other factors that are looked at while assigning ratings to the issuers are the stability and the priority of various payments towards the liabilities etc. The ratings are basically an indication of the probability of default. Therefore before making any investment the first step can be to check the issuer’s ratings by various credit rating companies and then decide whether it is worth to go forward with further analysis for investment or not.