Introducing Morningstar's corporate credit ratings

A new measure to help investors assess the credit risk of companies has been launched in the US and will soon come to the UK and Europe

Haywood Kelly, CFA 7 December, 2009 | 5:09PM

We're pleased to announce the launch of Morningstar's corporate credit ratings.

These new ratings describe a company's creditworthiness relative to the broader universe of corporate borrowers. The higher the grade, the more capable we think the company is of fulfilling its obligations to bondholders in a timely manner. At the top end of the range, we award AAA ratings to a handful of firms including Exxon, Johnson & Johnson and Microsoft. These wide-moat companies have impeccable balance sheets and the ability to generate copious amounts of cash. You can find a full list of our initial credit ratings here.

We're launching with credit ratings on 100 US companies but will be rolling out credit ratings on international companies in 2010. In selecting the 100 companies, we took a sample of companies from our coverage list from a variety of industries and a variety of credit profiles. Most are large firms with a significant amount of bonds outstanding. During the coming months, we'll be assigning ratings to more companies, prioritising the big bond issuers that are most relevant to bond investors. By the time we're done, we plan to rate all significant bond issuers on our coverage list, which would be up to 1,000 global companies.

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About Author

Haywood Kelly, CFA  Haywood Kelly, CFA, is vice president of equity research at Morningstar. He'd love to hear from you, and promises to read all your e-mail (even if he can't respond to it all).

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