Credit Ratings
Ratings are not a recommendation to purchase, hold or sell securities and may be changed, suspended or withdrawn at any time by the assigning rating agency. Freddie Mac's current ratings and the rating outlooks currently assigned to Freddie Mac are dependent upon economic conditions and other factors affecting credit risk that are outside the control of Freddie Mac. Each rating should be evaluated independently of the others. Detailed explanations of the ratings may be obtained from the rating agencies. The information above was obtained from information available on the websites of the rating agencies. Freddie Mac makes no representations or warranties with respect to the information contained herein and takes no responsibility for supplementing, updating or correcting any such information.
credit ratings
Credit ratings can be useful when evaluating an investment. But when considering credit ratings, you should understand their limitations. You should not base your investment decision solely on a credit rating or treat a credit rating as if it were investment advice.
Credit ratings generally reflect a relative ranking of credit risk. For example, an obligor or debt security with a high credit rating is assessed by the credit rating agency to have a lower likelihood of default (that is, not paying back its debt) than an issuer or debt security with a lower credit rating.
The SEC oversees and examines NRSROs. By law, however, the SEC is not permitted to regulate the substance of credit ratings or the procedures and methodologies the NRSROs use to determine credit ratings. Methodologies include, among other things, the quantitative and qualitative models used to determine credit ratings.
Many credit rating agencies make their ratings available to the public on their websites and with market data providers. Others require subscriptions to access their credit ratings. Your financial adviser may also have access to this information.
All NRSROs are required to provide on their public websites a description of their credit rating scales and definitions and the methodologies they use to determine their ratings. Credit rating agencies may require subscriptions or fees to obtain narrative reports containing credit analysis, although some credit rating agencies make these reports available for free.
When making investment decisions, credit ratings and any related rating and industry trend reports can be helpful tools, provided you use them appropriately. Credit ratings may offer an alternative point of view to your own financial analysis or that of your financial adviser.
Credit ratings may enable you to compare risks among investments in your portfolio. Considering the credit ratings of multiple credit rating agencies may be useful because they may offer diverse views on the creditworthiness of an investment.
In general, if you use credit ratings, they should be in addition to, and not a replacement for, your own research, analysis, and judgment to determine whether an investment best satisfies your needs. Remember that credit ratings address credit risk only. They do not address other risks such as liquidity risk, interest rate or market risk, or prepayment risk. The bottom line is that you should know what you are buying and only invest in what you understand.
In terms of comparing credit ratings performance across credit rating agencies, you should know that definitions for what their credit ratings mean differ among credit rating agencies. Credit rating agencies also use different analytical approaches and levels of subjectivity when determining credit ratings.
Credit rating agencies registered with the SEC are required each year to post on their websites performance statistics and the history of their credit ratings for their registered rating classes. The performance statistics show transition and default rates for the classes of ratings. Investors can also use these statistics to assess the stability, or volatility, of credit ratings within and among fixed income sectors.
Fitch Ratings also publishes other ratings, scores and opinions. For example, Fitch provides specialized ratings of servicers of residential and commercial mortgages, asset managers and funds. In each case, users should refer to the definitions of each individual scale for guidance on the dimensions of risk covered in each assessment.
Fitch will use credit rating scales to provide ratings to privately issued obligations or certain note issuance programs, or for private ratings using the same public scale and criteria. Private ratings are not published, and are only provided to the issuer or its agents in the form of a rating letter.
The primary credit rating scales may also be used to provide ratings for a narrower scope, including interest strips and return of principal or in other forms of opinions such as Credit Opinions or Rating Assessment Services.
Ratings assigned by Fitch are opinions based on established, approved and published criteria. A variation to criteria may be applied but will be explicitly cited in our rating action commentaries (RACs), which are used to publish credit ratings when established and upon annual or periodic reviews.
Principal Life Insurance Company, currently the largest operating company within the family of companies comprising the Principal Financial Group, and Principal National Life Insurance Company have received consistently high financial strength ratings from the rating agencies: A.M. Best Company, Moody's Investors Service, S&P Global, and Fitch Ratings.
A.M. Best's ratings for insurance companies range from "A++" to "S". A.M. Best indicates that "A++" and "A+" ratings are assigned to those companies that in A.M. Best's opinion have superior ability to meet ongoing obligations to policyholders.
Moody's Investors Service ratings for insurance companies range from "Aaa" to "C". Moody's Investors Service indicates that "A" ratings are assigned to those companies that offer good financial security.
In evaluating a company's financial and operating performance, these rating agencies review its profitability, leverage and liquidity, as well as its book of business, the adequacy and soundness of its reinsurance, the quality and estimated market value of its assets, the adequacy of its policy reserves, the soundness of its risk management programs, the experience and competency of its management and other factors. We believe our strong ratings are an important factor in marketing our products to our distributors and customers, as ratings information is broadly disseminated and generally used throughout the industry. Our ratings reflect each rating agency's opinion of our financial strength, operating performance and ability to meet our obligations to policyholders and are not evaluations directed toward the protection of investors. Such ratings are neither a rating of securities nor a recommendation to buy, hold or sell any security, including our common stock.
The Secretary of the Treasury and Federal Reserve Board have not yet established alternative non-ratings-based creditworthiness requirements applicable to the 100 largest insured banks under this revised provision of the National Bank Act. Until specific creditworthiness standards are established under 12 USC 24a, as modified by the Dodd-Frank Act, no specific creditworthiness requirements will be required of national banks applying to control or hold an interest in a financial subsidiary. Importantly, however, the requirements at 12 CFR 5.39(g)(1) and (2) still apply. These provisions generally provide that a national bank may control or hold an interest in a financial subsidiary only if it and each depository institution affiliate is well-capitalized and well-managed, and the aggregate consolidated total assets of all financial subsidiaries of the national bank do not exceed the lesser of 45 percent of the consolidated total assets of the parent bank or $50 billion.
For the most current and up-to-date information concerning the financial ratings of the Liberty Mutual Insurance Holding Company and its subsidiaries, please visit the website of the aforementioned rating agencies.
Moody's raised the State's GO rating to A1 from Baa1. The rating reflects a recalibration of certain public finance ratings by Moody's. Moody's is recalibrating its US municipal ratings from the municipal scale to the global scale. The recalibration does not reflect a change in credit quality, or a change in its credit opinion, of an issue or issuer. The recalibration is simply a change in scale.
Fitch raised the State's GO rating to A- from BBB. The rating reflects a recalibration of certain public finance ratings by Fitch. Fitch made the following statement regarding the recalibration "The recalibration of certain public finance ratings should not be interpreted as an improvement in the credit quality of those securities. Rather, they are adjustments to denote a comparable level of credit risk as ratings in other sectors."
Fitch Ratings upgraded the rating on approximately $37 billion State of California outstanding general obligation (GO) bonds to 'A' from 'A-'. Also upgraded, to 'A-' from 'BBB+', are the ratings on bonds issued by several agencies, but supported by state resources. The 'A' rating assigned to $1.3 billion veterans GO bonds and the A+ rating assigned to $10.9 billion GO economic recovery notes are affirmed. The rating actions reflect California's improved economic and revenue performance, and some progress in addressing the structural imbalance, which remains large. Debt levels are moderate.
Fitch Ratings lowered the State's general obligation bond rating to BBB from A. In addition, Fitch downgraded the State's lease revenue bonds to BBB from A-. Fitch did not downgrade the self-supporting veterans bonds ($1.9 billion outstanding), which remain at A. All ratings remain on "Rating Watch Negative." Fitch cited California's heavy reliance on the completion of an increased deficit financing and the tremendous amount of measures needed to close a widening budget gap. Also cited was the decision to submit the deficit bonds and the balanced budget proposal for the March 2004 election, injecting another element of uncertainty. 041b061a72