What Is Fitch Ratings?

Fitch Ratings is an international credit rating agency based in New York City and London. Investors use the company's ratings to determine which investments are less likely to default and yield a solid return. Fitch bases the ratings on several factors, such as what kind of debt a company holds and its sensitivity to systemic changes like interest rates.

Understanding Fitch Ratings

• AAA: companies of exceptionally high quality (established, with consistent cash flows)
• AA: still high quality; still has a low default risk.
• A: low default risk; slightly more vulnerable to business or economic factors
• BBB: a low expectation of default; business or economic factors could adversely affect the company

• BB: elevated vulnerability to default risk, more susceptible to adverse shifts in business or economic conditions; still financially flexible
• B: degrading financial situation; highly speculative
• CCC: a real possibility of default
• CC: default is a strong probability
• C: default or default-like process has begun
• RD: issuer has defaulted on a payment
• D: defaulted

Fitch Ratings and Sovereign Nations

Fitch offers sovereign credit ratings that describe each nation’s ability to meet its debt obligations. Sovereign credit ratings are available to investors to help give them insight into the level of risk associated with investing in a particular country. Countries will invite Fitch and other credit rating agencies to evaluate their economic and political environments and financial situations to determine a representative rating. It’s essential for countries to obtain the best sovereign credit rating possible, particularly in the case of developing nations, as it aids in accessing funding in international bond markets.

In 2018 Fitch awarded the United States the highest AAA long-term sovereign credit rating. On the lower end was Brazil with a BB-. However, in 2023, Fitch downgraded the U.S. to AA+, a rating between AAA and AA that signifies a slight reduction in confidence that the country can pay its debts—but the agency believes the U.S. is still a high quality investment with a low risk of defaulting.

Fitch Ratings of Companies and Others

Fitch Ratings also analyzes the issues of companies, local governments and agencies, and financial institutions for their creditworthiness. For example, the agency analyzed two of Jacksonville, Florida's special revenue bonds, awarding them an AA- investment grade rating. This means the municipality is rated between a low risk of default and a low expectation of default on its two issuances, which total more than $290 million. The bonds are intended to refund earlier bond issues and finance capital equipment and improvements in the city.

At the financial institution level, Fitch rated London-based National Westminster Bank mortgage-covered bonds at AAA, with a stable outlook. This rating is the highest available, signifying Fitch's confidence in the bank's bonds.

The Bottom Line

Fitch Ratings is a credit rating agency that rates institutions, corporations, and countries for their creditworthiness. The agency has been around for more than 100 years, offering insights to investors worldwide.