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Understanding Credit Rating Agencies for Publicly Listed Companies: A Comprehensive Overview

For publicly listed companies in the United Kingdom, credit ratings are a crucial measure of financial stability and trustworthiness, affecting their ability to access capital markets, secure loans and attract investors. The UK is home to several credit rating agencies, each with its unique approach to assessing creditworthiness. In this comprehensive article, we will explore the top credit rating agencies in the UK and what obtaining a credit rating can enable a company to do.



The Top Credit Rating Agencies in the UK


In addition to the three primary credit rating agencies - Moody's, Standard & Poor's (S&P), and Fitch Ratings, we list two additional credit rating agencies that publicly listed companies in the UK can turn to.


1. Moody's

Moody's is a globally recognised credit rating agency with over a century of experience providing credit ratings and analysis to a broad range of companies across various sectors. Moody's rating scales range from Aaa (the highest rating) to C (the lowest rating), with pluses and minuses used to denote intermediary ratings.


2. Standard & Poor's (S&P)

S&P is a well-known credit rating agency operating worldwide, with a reputation for rigorous methodologies and robust assessments of creditworthiness. Its ratings scale ranges from AAA (the highest rating) to D (the lowest rating).


3. Fitch Ratings

Fitch Ratings is a global leader in providing credit ratings and research, offering independent and transparent assessments of issuers' creditworthiness. The company's ratings scale ranges from AAA (the highest rating) to D (the lowest rating).


4. DBRS Morningstar

DBRS Morningstar is a Canadian-based credit rating agency, which has been operating in the UK for over a decade. It provides credit ratings and research to corporations, financial institutions, and government bodies. DBRS Morningstar's ratings scale ranges from AAA (the highest rating) to D (the lowest rating).


5. Egan-Jones Ratings

Egan-Jones Ratings is an independent credit rating agency, providing credit ratings and research to investors since 1995. It uses a proprietary methodology to assess an issuer's creditworthiness, and its ratings scale ranges from AAA (the highest rating) to D (the lowest rating).


What Does Obtaining a Credit Rating Enable a Company to Do?


Obtaining a credit rating can offer significant advantages to a company. Firstly, it allows the company to access capital markets and borrow money from investors at more favourable rates. This is because investors can assess the risk of lending money to the company and determine the interest rate based on the credit rating.


Secondly, a credit rating can boost investor confidence in the company's ability to repay its debts. This can lead to increased demand for the company's shares, raising the share price and increasing the company's market capitalisation.


Finally, a credit rating can improve the company's image, enabling it to attract new investors and partners. Credit ratings provide an objective measure of the company's financial health and stability, making it easier for investors to decide whether to invest in the company or not.


Conclusion


Credit ratings are a crucial aspect of the financial health of publicly listed companies in the UK, and they enable issuers to access capital markets, attract investors and improve their image. Moody's, S&P, Fitch Ratings, DBRS Morningstar, and Egan-Jones Ratings are the top credit rating agencies available in the UK, and each has its unique approach to assessing creditworthiness. Companies should carefully consider their options and work with the agency that best aligns with their needs and objectives to achieve optimal results.


Enquiries


For further information, please contact info@langdoncap.com


About the author


Sabbir Rahman is Managing Director of Langdon Capital and a Partner at Bridging Funding. He has held prior roles with Morgan Stanley, Lazard and Barclays Investment Bank. He has executed over £60 billion in notional value of transactions across financing, M&A and derivatives with global corporates, private equity funds and financial sponsor groups.


About Langdon Capital


Langdon Capital provides in-house transaction services to C-suites and Boards of publicly-listed and PE-backed businesses during the negotiation, execution and due diligence of corporate finance and capital markets transactions and senior interim resourcing solutions across finance, treasury, strategy and corporate development | contact info@langdoncap.com | visit www.langdoncap.com


About Bridging Funding


Bridging Funding is a private credit fund engaged in principal lending of commercial property bridging loans in the UK and select South-East Asian markets. We lend between £200k and £20m per transaction. As a private credit fund, our credit sanctioning process is leaner and more flexible than lenders funded by bank capital | contact sr@bridgingfunding.com | mention code “Langdon” for preferential rates | visit www.bridgingfunding.com



This is not financial advice or any offer, invitation or inducement to sell or provide financial products or services or to engage in any form of investment activity.

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