Fitch Ratings

Fitch Ratings Inc. is one of the "Big Three credit rating agencies", the other two
being Moody's and Standard & Poor's. It is one of the three nationally recognized
statistical rating organizations (NRSRO) designated by the U.S. Securities and
Exchange Commission in 1975.
Fitch Ratings is dual-headquartered in New York, USA, and London,
UK. Hearst owns 80% of the company following its acquisition of an additional 30
percent on December 12, 2014, in a transaction valued at $1.965 billion. Hearsts
previous equity interest was 50% following expansions on an original acquisition
in 2006.
The remaining 20% of Fitch is owned by FIMALAC SA, which will hold 50% of
votes within the Board until 2020.Fitch Ratings and Fitch Solutions are part of the
Fitch Group.
The firm was founded by John Knowles Fitch on December 24, 1914 in New York
City as the Fitch Publishing Company. It merged with London-based IBCA
Limited in December 1997. In 2000 Fitch acquired both Chicago-based Duff &
Phelps Credit Rating Co. (April) and Thomson Financial BankWatch (December).
Fitch Ratings is the smallest of the "big three" NRSROs, covering a more limited
share of the market than S&P and Moody's, though it has grown with acquisitions
and frequently positions itself as a "tie-breaker" when the other two agencies have
ratings similar, but not equal, in scale.

What is credit rating Agency?

A credit rating agency (CRA, also called a ratings service) is a company that
assigns credit ratings, which rate a debtor's ability to pay back debt by making
timely interest payments and the likelihood of default. An agency may rate the
creditworthiness of issuers of debt obligations, of debt instruments, and in some
cases, of the servicers of the underlying debt, but not of individual consumers.
The debt instruments rated by CRAs include government bonds, corporate
bonds, CDs, municipal bonds, preferred stock, and collateralized securities, such
as mortgage-backed securities and collateralized debt obligations.
The issuers of the obligations or securities may be companies, special purpose
entities, state or local governments, non-profit organizations, or sovereign
nations. A credit rating facilitates the trading of securities on a secondary market. It
affects the interest rate that a security pays out, with higher ratings leading to lower
interest rates. Individual consumers are rated for creditworthiness not by credit
rating agencies but by credit bureaus (also called consumer reporting agencies or
credit reference agencies), which issue credit scores.
The value of credit ratings for securities has been widely questioned. Hundreds of
billions of securities that were given the agencies' highest ratings were downgraded
to junk during the financial crisis of 200708. Rating downgrades during
the European sovereign debt crisis of 201012 were blamed by EU officials for
accelerating the crisis.
Credit rating is a highly concentrated industry, with the "Big Three" credit rating
agencies controlling approximately 95% of the ratings business. Moody's Investors
Service and Standard & Poor's (S&P) together control 80% of the global market,
and Fitch Ratings controls a further 15%.

Investment Scale

Fitch Ratings' long-term credit ratings are assigned on an alphabetic scale from
'AAA' to 'D', first introduced in 1924 and later adopted and licensed by S&P.
(Moody's also uses a similar scale, but names the categories differently.) Like
S&P, Fitch also uses intermediate +/ modifiers for each category between AA and
CCC (e.g., AA+, AA, AA, A+, A, A, BBB+, BBB, BBB, etc.).
Investment grade

AAA : the best quality companies, reliable and stable

AA : quality companies, a bit higher risk than AAA
A : economic situation can affect finance
BBB : medium class companies, which are satisfactory at the moment
Non-investment grade

BB : more prone to changes in the economy

B : financial situation varies noticeably
CCC : currently vulnerable and dependent on favorable economic conditions
to meet its commitments
CC : highly vulnerable, very speculative bonds
C : highly vulnerable, perhaps in bankruptcy or in arrears but still continuing
to pay out on obligations
D : has defaulted on obligations and Fitch believes that it will generally default
on most or all obligations
NR : not publicly rated
Short-term credit ratings
Fitch's short-term ratings indicate the potential level of default within a 12-month
period.

F1+ : best quality grade, indicating exceptionally strong capacity of obligor to

meet its financial commitment
F1 : best quality grade, indicating strong capacity of obligor to meet its
financial commitment
F2 : good quality grade with satisfactory capacity of obligor to meet its
financial commitment
F3 : fair quality grade with adequate capacity of obligor to meet its financial
commitment but near term adverse conditions could impact the obligor's
commitments
B : of speculative nature and obligor has minimal capacity to meet its
commitment and vulnerability to short term adverse changes in financial and
economic conditions
C : possibility of default is high and the financial commitment of the obligor
are dependent upon sustained, favorable business and economic conditions
D : the obligor is in default as it has failed on its financial commitments.

Fitch Solutions
Launched in 2008, Fitch Solutions offers a range of fixed-income products
and professional development services for financial professionals. The firm
also distributes Fitch Ratings' proprietary credit ratings, research, financial
data, and analytical tools.

Increased investor concerns about rising government deficits and debt levels
across the globe have underscored the need for timely sovereign intelligence.
Whether investing in sovereign debt or assessing risk exposure to eurozone
contagion, financial professionals today require comprehensive, prospective
and objective sovereign credit research and ratings. To meet this need, Fitch
Solutions offers Fitch Researchan online service providing access to Fitch
Ratings research, commentary and credit opinions, as well as Fitch
Solutions fundamental financials and market-based content, on the foreign
and local debt of sovereign governments and related entities. Fitch
Researchs comprehensive sovereign coverage includes informed analysis
 and commentary on key political and economic developments as well as
ratings on more than 100 sovereign governments and their international and
local debt issues. Fitch Research also offers CDS indices, and liquidity
scores. Additionally, a Peer Analysis Tool enables subscribers to conduct
sovereign peer analyses leveraging over 75 key variables and ratios, four
sovereign ratings types, historical data from 1996 onwards, as well as three
years of forecast data. With timely coverage of sovereign credit
developments along with market-based content, Fitch Research enables
market participants to confidently evaluate the credit quality of sovereign
governments around the world.

Key Benefits
Gain access to comprehensive sovereign ratings and research on more than
100 countries to help monitor up-to-the-minute country rating changes,
understand economic and credit trends, and make informed investment
decisions
Access to experienced Fitch Ratings analysts around the world, including
economists drawn from both the private and public sectors
Leverage real-time research and information that is used by over 90% of the
worlds largest investors
Facilitate analysis with customizable portfolios delivered in user-friendly
formats
Leverage market-based indicators alongside traditional credit ratings for
more holistic credit risk management.
Utilize additional credit risk indicators to further validate and benchmark
your own assessments
Stay abreast of the latest political and economic developments in countries
of your interest with email notifications of critical changes.
Reduce the amount of time required to complete peer analyses on over 100
sovereign entities
Access Fitch Research content anytime, anywhere from the Fitch Mobile
iPad app
Criticism
Credit rating agencies such as Fitch Ratings have been subject to criticism in the
wake of large losses in the collateralized debt obligation (CDO) market that
occurred despite being assigned top ratings by the CRAs. For instance, losses on
$340.7 million worth of collateralized debt obligations (CDO) issued by Credit
Suisse Group added up to about $125 million, despite being rated AAA by
Fitch.[5] However, differently from the other agencies, Fitch has been warning the
market on the constant proportion debt obligations (CPDO) with an early and pre-
crisis report highlighting the dangers of CPDO's.

References

1. Group, Fitch. "2011 Fiscal". FIMALAC. Retrieved 26 March 2012.

2. https://www.fitchratings.com/about
3. http://www.juneauempire.com/stories/050509/opi_436594375.shtml
4. http://hugin.info/143461/R/1601708/505879.pdf
5. Tomlinson, Richard; Evans, David (2007-06-01), "CDOs mask huge subprime losses, abetted by
credit rating agencies", International Herald Tribune
6. Linden, Alexandre; Neugebauer, Matthias; Schiavetta, John; Zelter, Jill; Hardee, Rachel (2007-04-
18), First Generation CPDO: Case Study on Performance and Ratings