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Where have you heard about Standard & Poor's rating?

Standard & Poor's rating

What is Standard & Poor's rating?

One of the three big credit rating agencies that score countries and companies on their ability to pay back debt. The credit rating given is generally seen as a bellwether on the strength of a nation's economy.

After the Brexit vote in June 2016, S&P, as it's known, downgraded its rating for the UK. It warned the vote to leave the European Union would lead to 'a less predictable, stable and effective policy framework in the UK'.

What you need to know about Standard & Poor's rating.

Of the three main credit rating agencies, S&P is the oldest - established in 1860 by Henry Poor before joining forces with the Standard Statistics Bureau in the 1940s.

The ratings are made up of letters. The highest rating is AAA, and anything below BB is deemed speculative or a junk bond.

The rating is important to governments and investors, because a higher rating means the country or company is more likely to be able to repay its debt, therefore the borrower in question is usually charged a lower interest rate. When a country or company is downgraded, as the UK was in 2016, investors demand higher returns in return for the extra risk.

Find out more about Standard & Poor's rating.

Find out more about credit ratings with our definitions of Moody's, Fitch Ratings and AAA.

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