- Ratings
- Ratings Definitions
Issuer Ratings use the same rating scale and definitions as unsecured corporate bond ratings. The scale is composed of 10 broad rating categories from AAA to D that indicate different levels of debt service capacity. AAA through BBB ratings are classified as investment grade, which indicates adequate debt service capacity, whereas BB through C ratings are classified as speculative grade, which indicates substantial vulnerability to changes in the external environment.
| AAA | An 'AAA' rating indicates the strongest capacity for timely repayment. |
|---|---|
| AA | An 'AA' rating indicates very strong capacity for timely repayment. This capacity may, nevertheless, be slightly inferior than is the case for the highest rating category. |
| A | An 'A' rating indicates strong capacity for timely repayment. This capacity may, nevertheless, be more vulnerable to adverse changes in circumstances or in economic conditions than is the case for higher rating categories. |
| BBB | A 'BBB' rating indicates that capacity for timely repayment is adequate, but adverse changes in circumstances and in economic conditions are more likely to impair this capacity. |
| BB | A 'BB' rating indicates that the capacity for timely repayment is currently adequate, but that there are some speculative characteristics that make the repayment uncertain over time. |
| B | A 'B' rating indicates lack of adequate capacity for repayment and speculative characteristics. Interest payment in time of unfavorable economic conditions is uncertain. |
| CCC | A 'CCC' rating indicates lack of capacity for even current repayment and high risk of default. |
| CC | A 'CC' rating indicates greater uncertainties than higher ratings. |
| C | A 'C' rating indicates high credit risk and lack of capacity for timely repayment. |
| D | A 'D' rating indicates insolvency. |
※ '+' or '-' modifier can be attached to ratings through AA to B to differentiate ratings within broader rating categories.
Bond rating scale is composed of 10 broad rating categories from AAA to D that indicate different levels of debt service capacity. AAA through BBB ratings are classified as investment grade, which indicates adequate debt service capacity, whereas BB through C ratings are classified as speculative grade, which indicates substantial vulnerability to changes in the external environment.
| AAA | An 'AAA' rating indicates the strongest capacity for timely repayment. |
|---|---|
| AA | An 'AA' rating indicates very strong capacity for timely repayment. This capacity may, nevertheless, be slightly inferior than is the case for the highest rating category |
| A | An 'A' rating indicates strong capacity for timely repayment. This capacity may, nevertheless, be more vulnerable to adverse changes in circumstances or in economic conditions than is the case for higher rating categories. |
| BBB | A 'BBB' rating indicates that capacity for timely repayment is adequate, but adverse changes in circumstances and in economic conditions are more likely to impair this capacity. |
| BB | A 'BB' rating indicates that the capacity for timely repayment is currently adequate, but that there are some speculative characteristics that make the repayment uncertain over time. |
| B | A 'B' rating indicates lack of adequate capacity for repayment and speculative characteristics. Interest payment in time of unfavorable economic conditions is uncertain. |
| CCC | A 'CCC' rating indicates lack of capacity for even current repayment and high risk of default. |
| CC | A 'CC' rating indicates greater uncertainties than higher ratings. |
| C | A 'C' rating indicates high credit risk and lack of capacity for timely repayment. |
| D | A ‘D’ rating indicates insolvency. |
※ '+' or '-' modifier can be attached to ratings through AA to B to differentiate ratings within broader rating categories.
CP rating scale is composed of 6 categories from A1 to D. A1 through A3 are classified as investment grade, which indicates adequate debt service capacity, whereas B and C are classified as speculative grade, which indicates substantial vulnerability to changes in the external environment.
| A1 | An 'A1' rating indicates the strongest capacity for timely repayment, and this capacity is highly stable. |
|---|---|
| A2 | An 'A2' rating indicates strong capacity for timely repayment. This capacity, nevertheless, is slightly inferior than is the case for the highest rating category. |
| A3 | An 'A3' rating indicates satisfactory capacity for timely repayment and stability of that capacity. The stability, nevertheless, is slightly inferior than is the case for higher rating categories. |
| B | A 'B' rating indicates adequate capacity for timely repayment. This capacity, however, lacks stability and is susceptible to short-term changes in economic conditions. |
| C | A 'C' rating indicates clear speculative characteristics. |
| D | A 'D' rating indicates insolvency. |
※ '+' or '-' modifier can be attached to ratings through A2 to B to differentiate ratings within broad rating categories.
Structured finance ratings use the same rating scale as corporate bond rating or CP rating depending on the type of security issued. Use of same rating scales as corporate bond rating or CP rating facilitates investors’ understanding of credit risk associated with structured finance securities.
| AAA | An 'AAA' rating indicates the strongest capacity for timely repayment |
|---|---|
| AA | An 'AA' rating indicates very strong capacity for timely repayment. This capacity may, nevertheless, be slightly inferior than is the case for the highest rating category. |
| A | An 'A' rating indicates strong capacity for timely repayment. This capacity may, nevertheless, be more vulnerable to adverse changes in circumstances or in economic conditions than is the case for higher rating categories. |
| BBB | A 'BBB' rating indicates that capacity for timely repayment is adequate, but adverse changes in circumstances and in economic conditions are more likely to impair this capacity. |
| BB | A 'BB' rating indicates that the capacity for timely repayment is currently adequate, but that there are some speculative characteristics that make the repayment uncertain over time. |
| B | A 'B' rating indicates lack of adequate capacity for repayment and speculative characteristics. Interest payment in time of unfavorable economic conditions is uncertain. |
| CCC | A 'CCC' rating indicates lack of capacity for even current repayment and high risk of default. |
| CC | A 'CC' rating indicates greater uncertainties than higher ratings. |
| C | A 'C' rating indicates high credit risk and lack of capacity for timely repayment. |
| D | A 'D' rating indicates insolvency. |
※ '+' or '-' modifier can be attached to ratings through AA to B to differentiate ratings within broader rating categories.
| A1 | An 'A1' rating indicates the strongest capacity for timely repayment, and this capacity is highly stable. |
|---|---|
| A2 | An 'A2' rating indicates strong capacity for timely repayment. This capacity, nevertheless, is slightly inferior than is the case for the highest rating category. |
| A3 | An 'A3' rating indicates satisfactory capacity for timely repayment and stability of that capacity. The stability, nevertheless, is slightly inferior than is the case for higher rating categories. |
| B | A 'B' rating indicates adequate capacity for timely repayment. This capacity, however, lacks stability and is susceptible to short-term changes in economic conditions. |
| C | A 'C' rating indicates clear speculative characteristics. |
| D | A 'D' rating indicates insolvency. |
※ '+' or '-' modifier can be attached to ratings through A2 to B to differentiate ratings within broad rating categories.
| AAA | An 'AAA' rating indicates the strongest capacity for timely repayment of policyholder obligations. |
|---|---|
| AA | An 'AA' rating indicates very strong capacity for timely repayment of policyholder obligations. This capacity may, however, be slightly inferior than is the case for the highest rating category. |
| A | An 'A' rating indicates strong capacity for timely repayment of policyholder obligations. This capacity may, however, be more vulnerable to adverse changes in circumstances or in economic conditions than is the case for higher rating categories. |
| BBB | A 'BBB' rating indicates that capacity for timely repayment of policyholder obligations is currently adequate, but the capacity is more likely to be impaired by adverse changes in circumstances and in economic conditions. |
| BB | A 'BB' rating indicates that the capacity for timely repayment is currently adequate, but that there are some speculative characteristics that make the repayment uncertain over time. |
| B | A 'B' rating indicates lack of adequate capacity for repayment and speculative characteristics. Repayment of policyholder obligations at time of unfavorable economic conditions is uncertain. |
| CCC | A 'CCC' rating indicates lack of capacity for even current repayment and high risk of default. |
| CC | A 'CC' rating indicates greater uncertainties than higher ratings. |
| C | A 'C' rating indicates high credit risk and lack of capacity for timely repayment. |
| D | A 'D' rating indicates insolvency. |
※ '+' or '-' modifier can be attached to ratings through AA to B to differentiate ratings within broader rating categories.
Korea Investors Service introduced Watchlist system on November 1, 1998, which was the first among Korean credit rating agencies. Watchlist is used to indicate that a rating is placed under review for possible change to incorporate changes in factors that affect the issuer’s credit quality.
Global rating agencies, including Moody’s Investors Service, have used the Watchlist as an important part of their ratings processs to meet investors’ needs for timely rating updates.
A rating may be put on KIS Watchlist for possible upgrade, downgrade, or occasionally with direction uncertain along with the rationale behind such Watchlist placements in order to provide investors with an indication of the likely direction.
- Possible Upgrade : When there are factors that warrant potential rating upgrade
- Possible Downgrade : When there factors that warrant potential rating downgrade
- Direction Uncertain : When there are factors that warrant potential rating change but the direction is unclear
KIS rating outlook, introduced on September 1, 2002, is an opinion regarding the likely direction of a rating over the medium term.
Managed separately from rating category or notch, a rating outlook serves as a supplementary indicator to inform the investors of the likely movement in the credit rating. It indicates the direction in which a rating may move over a medium-term horizon of generally two years based on key rating factors that might affect credit rating.
KIS assigns rating outlook only to long-term debt instruments, such as corporate bonds (CP, ABS, other debt instruments currently in default, or subject to corporate workout programs and the Corporate Restructuring Promotion Act excluded). Also, it does not assign outlook to a rating placed on the Watchlist.
- Positive : The rating may be revised upwards over the medium term reflecting key rating factors that might affect the credit quality of individual debt instruments as of rating assignment date.
- Stable : The rating may remain static over the medium term reflecting key rating factors that might affect the credit quality of individual debt instruments as of rating assignment date.
- Negative : The rating may be revised downwards over the medium term reflecting key rating factors that might affect the credit quality of individual debt instruments as of rating assignment date.
- Developing : Faced with considerable uncertainty about future conditions, the direction of a future rating is uncertain over the medium term reflecting key rating factors that might affect the credit quality of individual debt instruments as of rating assignment date.
