How does Moody's Corporation rate credit risk?
Moody's Corporation rates credit risk by evaluating various factors such as a borrower's financial stability, industry outlook, and macroeconomic conditions. Their credit rating process involves analyzing qualitative and quantitative information, including financial statements, industry trends, and management strategies. Moody's assesses the likelihood of default and the severity of loss in the event of default. The rating assigned indicates the creditworthiness of a borrower, indicating the level of risk associated with lending to them. Ratings range from high investment-grade (low credit risk) to speculative-grade (high credit risk). Moody's uses a comprehensive and rigorous methodology, enhancing transparency and consistency in their credit risk assessments. Additionally, they regularly review and update ratings to reflect any changes in the underlying credit risk.
Answered May 3, 2024
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