Key Points from S&P Global

S&P Global, formerly known as Standard & Poor's (S&P), is a leading business intelligence company that specializes in providing credit ratings for bonds, countries, and other investments. The company gathers information from various sources such as annual reports, press releases, and news articles to create these ratings.

How S&P Global Operates

The merger of two financial companies in 1941 resulted in the creation of Standard & Poor's, now known as S&P Global. The company offers a range of financial market services, including customized analysis and market indexes, in addition to credit ratings. The S&P Global credit rating is a description of the general creditworthiness of entities issuing debt, and it is used to assess their ability to meet financial obligations.

In addition to rating companies, S&P also provides credit ratings for individual bonds, which can help investors make informed decisions on their investments. The company's best-known index is the S&P 500, a stock market index that tracks the largest publicly traded companies in the U.S.

Rating Process at S&P Global

Analysts at S&P Global use a variety of resources to evaluate companies' financial condition, performance, and risk management strategies. The company shifted its revenue structure in 1968 to charge the companies being rated, rather than investors, to address rising costs and demand for credit ratings.

Understanding S&P Global Ratings

S&P credit ratings are letter grades that indicate the creditworthiness of entities, with AAA being the highest grade and D indicating a default. The company also provides outlook ratings to project entities' future performance. S&P's bond ratings help investors assess risks and rewards associated with various types of bonds.

S&P Global's Impact and Controversies

S&P has faced criticism for its role in the 2008 financial crisis, as it and other rating agencies assigned high ratings to risky mortgage-backed securities. This led to downgrades when the housing market declined. S&P also publishes ratings for countries, assessing the likelihood of sovereign debt default based on various economic factors.