What Is A+/A1?
A+ /A1 refers to two ratings issued to long-term bonds and bond issuers by the competing credit rating agencies Standard & Poor's (S&P) and Moody's respectively. S&P uses A+, and Moody's uses A1, but both indicate pretty much the same thing.
Both A+ and A1 sit squarely in the middle of the investment-grade category of their credit ranking systems. They signify that bonds are of high-quality and have many positive qualities, but do carry a slightly higher degree of long-term investment risk.
key takeaways
- A+/A1 are credit ratings produced by ratings agencies S&P and Moody's.
- Both A+ and A1 fall in the middle of the investment-grade category, indicating some but low credit risk.
- Credit ratings are used by investors to gauge the creditworthiness of issuers, with better credit ratings corresponding to lower interest rates.
Understanding A+/A1
Both A+ and A1 represent the fifth-highest rating a debt issuer or a debt instrument can receive.
At Moody's, the A1 rating comes after the Aaa, Aa1, Aa2, and Aa3 ratings. The A rating itself denotes that the bond (or whatever security is being rated) is "upper-medium grade and subject to low credit risk." The modifier 1 indicates that "the obligation ranks in the higher end of its generic rating category."
At Standard & Poor's, the A rating comes after the AAA, AA+, AA, and AA- ratings. The A rating itself denotes a "strong capacity to meet financial commitments, but somewhat susceptible to adverse economic conditions and changes in circ*mstances." S&P further fine-tunes the evaluation by adding a + or – to the letter.
Both A+ and A1 are six rankings above the cutoff that separates investment-grade debt from high-yield, or non-investment-grade, debt, which carries ratings of Baa1/BBB+, Baa2/BBB, Baa3/BBB-, or even lower. The A+/A1 rating signifies that the issuer or carrier has stable financial backing and ample cash reserves. The risk of default for investors or policyholders is very low.
The credit ratings assigned by the various rating agencies are based primarily upon the insurer's or issuer's creditworthiness; in a sense, they are a quantified assessment of the creditworthiness of a borrower. A+ and A1, like all ratings, can be interpreted as a direct measure of the probability of default. However, credit stability and priority of payment are also factored into the rating.
Example of A+/A1
For example, XYZ Corp. is a company that is looking to raise capital by issuing long-term debt. It is a company that produces a popular consumer product and has a strong balance sheet with lots of free cash flow. It issues a responsible amount of debt and is easily able to make interest payments on its bonds until they mature—for now.
However, there are some changes on the horizon that might affect the company's financial standing. There are signs that sales of its flagship product are slowing, and new environmental regulations might necessitate it making some costly upgrades to its factories and production methods.
As a result, Moody's and S&P rank XYZ's debt an A+/A1. In so doing, they are saying the company has adequate capacity to meet financial commitments, along with many positive investment attributes; but it also has elements susceptible to adverse effects of changes in economic conditions.
FAQs
A+/A1 are credit ratings produced by ratings agencies S&P and Moody's. Both A+ and A1 fall in the middle of the investment-grade category, indicating some but low credit risk. Credit ratings are used by investors to gauge the creditworthiness of issuers, with better credit ratings corresponding to lower interest rates.
What is A1 short term rating? ›
ICRA's Short-Term Rating Scale
For securities with original maturity within one year. [ICRA]A1 Securities with this rating are considered to have very strong degree of safety regarding timely payment of financial obligations. Such securities carry lowest credit risk.
What is a 1 credit rating equivalent to? ›
An obligor rated 'A-1' has strong capacity to meet its financial commitments. It is rated in the highest category by S&P Global Ratings. Within this category, certain obligors are designated with a plus sign (+). This indicates that the obligor's capacity to meet its financial commitments is extremely strong.
What is Aa1? ›
AA+ and Aa1 are assigned by S&P and Moody's, respectively, denoting high-quality investment-grade products. These scores signify the issuer is financially sound, has adequate revenues and cash reserves to pay its debts, and the risk of default is low.
How much credit is a A+? ›
How do I calculate my Grade Point Average?
| Letter Grade | Grade Point Value Per Credit | Percentage |
|---|
| A+ | 4.33 | 95 - 100 |
| A | 4.00 | 90 - 94 |
| A- | 3.67 | 85 - 89 |
| B+ | 3.33 | 80 - 84 |
9 more rowsMoody's uses a numerical indicator. For example, A1 is better than A2 (but still not as good as Aa3).
What is A1 standard? ›
The size of A1 paper is 594 x 841 mm or 59.4 x 84.1 cm, which is 23.4 x 33.1 inches. It's normally used for advertising purposes, such as large posters and display banners. It can also be used in professional settings, for flipcharts and architectural drawings.
What is a 1 short-term credit rating? ›
Short-term Issue Credit Ratings.
The scale runs from A-1 to D. An A-1 rating may be designated with a plus sign (+) to indicate that the issuer's commitment to meet its obligation is extremely strong. A-1, A-2, A-3 (from best quality to good quality but somewhat vulnerable to changing economic conditions).
What is the 1 to 5 rating criteria? ›
How to use a 1 to 5 rating scale
- 1 means you didn't enjoy it at all and would not recommend it to others.
- 2 means you didn't enjoy it but might recommend it to others.
- 3 means you enjoyed it, but it wasn't your favorite.
- 4 means you really enjoyed it and would recommend it to others.
Highlights: While older models of credit scores used to go as high as 900, you can no longer achieve a 900 credit score. The highest score you can receive today is 850. Anything above 800 is considered an excellent credit score.
What Is a Bad Credit Score? On the FICO® Score☉ 8 scale of 300 to 850, one of the credit scores lenders most frequently use, a bad credit score is one below 670. More specifically, a score between 580 and 669 is considered fair, and one between 300 and 579 is poor.
What are the 5 levels of credit scores? ›
Here's how FICO breaks down credit scores:
- Below 580: poor.
- 580 to 669: fair.
- 670 to 739: good.
- 740 to 799: very good.
- 800 and above: exceptional.
Short Term rating of (ICRA) A1+ (ICRA A one plus) for Certificate of Deposits. As per ICRA ratings schedule – 1. Long term instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations and carry low credit risk.
Is AA better than a+? ›
For example, with S&P and Fitch, a rating of AA+ is better than AA, and a rating of AA- is worse than AA but better than A+. Moody's uses numbers to indicate relative quality, with Aa1 being the best Aa rating, followed by Aa2 and Aa3.
Is AA+ rating good? ›
What Does AA+ Mean? The AA+ rating is issued by S&P and Fitch and is similar to the Aa1 rating issued by Moody's. This rating is still of high quality but it falls below the AAA ranking. It comes with very low credit risk even though long-term risks may affect these investments.
What credit score is an A+ rating? ›
The A credit grade generally reflects having a “good” credit score or higher (typically 700 or above) according to the FICO rating systems and others. 1 Sometimes, lenders will designate an additional “A+” for borrowers with the highest scores.
Is A+ higher than AA? ›
From there, numbers or symbols further break down the letter-based rating. For example, with S&P and Fitch, a rating of AA+ is better than AA, and a rating of AA- is worse than AA but better than A+.
What is grade a credit? ›
Key Takeaways. An A-Credit grade is a top letter grade a lender may assign to a prospective borrower. Letter grades are often based on credit scores but can vary from lender to lender. A score of "A" helps borrowers qualify for lower interest rates.
What is an A2 credit score? ›
A2. The sixth highest rating in Moody's Long-term Corporate Obligation Rating. Obligations rated A2 are considered upper-medium grade and are subject to low credit risk.
