Home Methodology Rating scales and symbols Symbols of the long-term rating scale - Rating of Sovereign
Symbols of the long-term rating scale - Rating of Sovereign
Thursday, 20 September 2018
Symbol Definícia

AAA

Supreme rating. This symbol means that the company/title (issues) bears the minimum investment risk. The companies/titles labelled with this symbol contain very high probability of capability and willingness to pay principal, interests and fixtures of an investment in time and without any unnecessary delay. It is also highly improbable that the company/title might be threatened by alterations of economic or another external environments.

AA

The company/title (issue) bears a very low investment risk exposure. Companies/titles labelled with such symbol contain high probability of capability and willingness to pay principal, interest and fixtures of the investment in time and without any unnecessary delay. However, it is probable that the company/title may be threatened by distinct variations of economic or another external environment.

A

The company/title (issues) bears a low investment risk exposure. Companies/titles labelled with this symbol contain probability of uncertain capability or willingness to repay principal, interests and fixtures of investments in time and without any unnecessary delays. It is probable the company/title can be threatened by more serious variations of economic or another external environment.

BBB

The company/title (issues) bears a certain investment risk exposure. Companies/titles labelled with this symbol contain risk associated with capability or willingness to repay principal, interests and fixtures of investments in time and without any unnecessary delays. Capability of the company/issuer to pay principal, interests and fixtures of investment in time and without any unnecessary delay may be disturbed by variations of economic or another external environment.

BB

The company/title (issues) bears high investment risk exposure. Companies/titles labelled with this symbol contain high risk associated with capability or willingness to repay principal, interests and fixtures of investments in time and without any unnecessary delays. Capability of the company/issuer to repay principal, interests and fixtures of investment in time and without any unnecessary delay is not stable and may be substantially disturbed by variations of economic or another external environment.

B

The company/title (issues) bears a very high investment risk exposure. Companies/titles labelled with this symbol contain very high risk of preference to repay interests to repayment of principal. Even non-distinct variations of external environment may disturb capability of the company/issuer to repay its liabilities.

CCC

The company/title (issues) bears an extraordinarily high investment risk exposure higher than common in the sector of the company's/issuer's operation. Negative variations of external environment of any scope mean real risk of default.

CC

The company/title (issues) bears a high default risk exposure and its capability to repay its liabilities depends on distinctively positive development of the sector and industry of the operation of the company/issuer.

C

The company/title (issues) bears a very high default risk exposure. Even the positive development of the sector and industry of the company's/issuer's operation needn't mean its capability to repay liabilities in time and without unnecessary delay.

D/SD

This symbol means that liabilities of this company/title (issues) are in default.


All rating symbols in the categories AA to C may be supplemented by an index (+/plus) or (-/minus) indicating relative position within the rating category. Each symbol in the long-term rating scale may also be supplemented by an outlook information (stable, positive, negative) which reflects the expected retention or change of the rating in the current assessment period (pursuant to the monitoring process within the validity period of the rating).

Defition of default

ERA identifies two types of default ratings for sovereign (Rated Entity):

  • SD indicates that the Rated Entity is in default on one or more of its financial obligations. The Agency has reasons to believe that the debtor will continue to service its other financial obligations in a timely fashion and in full amount.
  • D indicates that the Rated Entity is in default on most if not all of its financial obligations.

Default is defined as the Rated Entity’s current and/or future inability (according to ERA) to service its financial obligations that are based on one of the following credit events or their combination:

  • unexecuted or delayed principal or interest payments in accordance with the Rated Entity’s contractual obligations (with the exception of missed payments that fall within the contract-stipulated grace period);
  • coming into effect of an acceleration of an obligation as a consequence of a required acceleration on any other similar obligation (cross-acceleration);
  • coming into effect of an acceleration of an obligation due to a declared default on any other similar obligation(s) (cross-default);
  • waiver or moratorium, which prompts the counterparty to refuse payment or dispute its legal obligations;
  • debt restructuring that entails a unilateral withdrawal, deferment, changes in the debt repayment schedule and/or interest rate that are viewed as less favorable by the creditors in comparison with the initial debt agreements;
  • asset substitution under a stress scenario, in which the following two conditions are met simultaneously:

-        the Rated Entity offer its creditors new or restructured debt (in combination with other assets), discounted cash receipts, which are smaller than the discounted cash receipts of the original debt;

-          this operation allows the Rated Entity to avoid bankruptcy or default on future payments.

Credit risk in the context of Rated Entities relates to both the ability and willingness to pay. This assesses the relative probability of default by a national government on its debt (interest and/or principal payments) to private creditors. Failure to pay on bilateral debt between the Rated Entity and other governments (or supranational institutions) may not constitute a default, unless such default poses a default risk as a byproduct of a potential pari passu treatment of official and private creditor debt.