Regulatory Alerts2022-05-17
Explaining Credit Ratings
The Reserve Bank of New Zealand issues this document to define credit ratings as independent assessments of a financial institution's creditworthiness and default probability. It clarifies that ratings provide a medium-term view of financial strength rather than a guarantee of safety, distinguishing between complex financial instruments and established institutional obligations. The guide further explains how to compare standardized rating scales across major agencies and advises investors to use ratings as one tool among many for informed decision-making.
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