14. What is the S&P Rating

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In this lesson, we learned about the three different credit organizations that rate a company's debt. Those three organizations are Standard and Poors, Fitch, and Moody's.
Although each of these organization do the same thing, we learned that the scoring techniques and accuracy is different.
It's very important to understand the risks associated with each credit rating, and that's why we compared the chance of default to the letter score.
Understanding the chance of default provides an investor actual data to determine their appetite for risk.
When assessing the risk between a corporate bond and a municipal bond, we know that the letter rating system is flawed because the historical percentages are drastically different. This is something every investor should think about before investing in a AAA municipal bond.
In the end, we learned that each investor needs to determine their own risk and make judgments for themselves. Remember the greatest risk is not knowing what you're doing. So do your research and think about what credit scores actually mean.

[@paulwood128]

How do you get a companies credit score without paying money? The S&P site charges you money...so does Moodys

[@Philosopherjonathanmorel]

Just go on Bloomberg

[@Philosopherjonathanmorel]

Or standardandpoors.com

[@arginvestor5331]

As @Rusty Ryan pointed out before the biggest rating agencies in the US back in 2005 - 2008 were rating as triple A investments all the toxic mortgage debt and the financial institutions until the bubble burst and the crash happened, this only occurred because those rating agencies depended of the same capital that was immensely benefited with those toxic assets. Therefore I guess you have to be very careful with your source of information. I would like to ask Preston if he knows if after the 2008 crisis the congress voted some regulation for rating agencies.

[@romrom1734]

Good video Preston, but I mean, those grades are kind of pointless anyway no ? because if you look at the stock market crash in 2008 a lot of companies had a great rating like AAA and failed anyway because it's was actually overated ! (Lehman brothers and others for instance)

[@carlosg218]

How could I find the credit rating of a company? Where is that information?

[@TheHeatProducer]

Dear Preston, Is Price per book value (P/BV) equals to Price per Book ( P/B as visible on morningstar.com) ?

[@yeti233]

Hey Preston, any good website for browsing, search bonds by ratings? Thanks

[@RobotMowerTricks]

Moodys AA vs A municipal failure rate seems backward. Does that indicate their ratings are not very accurate?

[@19wael96]

I'm considering buying your online courses now, because you have delivered a lot of value in these free videos I'm curious to see what I can get when I pay for the lessons.

[@dee8558]

You want to look at how much mutual funds hold too, generally it's a harbinger because all those CFA Charterholders will have screened the company already. Nothing like mutual fund % and credit rating agencies' opinion.

[@craiggraham719]

I have a similar question to user F Gomez - How could I find the credit rating of a company? Where is that information? And do I have to pay for it? I'm a big fan of your channel but please get back to me when you can.

[@BS-qu5wy]

This man knows how to teach. I am buying his courses.

[@bendimiero380]

This video was fabulous, thank you for putting this one and the rest of these together

[@robertocanales1201]

Thank you very much! 😑🙏🏼

[@andrerothweiler9191]

They just could make a number from 0 - 100, that would be great. Same shit with coins as I was in UK

[@joelschanbacher]

@Preston Pysh, Where did you derive your percentages from on the default rates? I'm doing research for a paper for Finance class and found Moody's site, for example, to report their average historical Corporate B default rate (1920-2010) as 3.01%, while you quoted 43.34%. I love the videos, by the way.

[@Kiwinnit]

although this was in 2008? So I assume those percentages are a bit inflated

[@KaushikChoudhury]

Thanks explaining the mysterious rating system . One question - does the cummulative histrocial default rates table guideline figures can be used for India govt. and corporation sector or it is specifically for US ?

[@kahlschlag17]

Other important point to mention is that bond holders are compensated before share holders in case of default.

[@youcan5863]

Thank you 🙏

[@youcan5863]

Thank you 🙏

[@tinnguyen2219]

Thank you, greatly appreciated!

[@mazharsoufi5270]

Awesome thanks a lot

[@samwheller]

Thank you Sir.

[@paulstephen2009]

great learning

[@GhulamDr]

perfect

[@raytin142]

Yo

[@bengarmon4168]

im pretty sure s&p stands for sperry and polo crew. LOOK IT UP.