Their system is vague but about as good as it gets which is to say not very.
Moody's ratings
Includes the differences with
Standard and Poor's ratings.
Long-term obligation ratings
Investment grade
Aaa: Moody judges obligations rated Aaa to be the highest quality,[11] with the "smallest degree of risk".[12]
Aa (Aa1, Aa2, Aa3): Moody judges obligations rated Aa to be high quality, with "very low credit risk",[11] but "their susceptibility to long-term risks appears somewhat greater".[12] (AA+, AA and AA- in S&P)
A (A1, A2, A3): Moody judges obligations rated A as "upper-medium grade", subject to "low credit risk",[11] but that have elements "present that suggest a susceptibility to impairment over the long term".[12] (A+, A and A- in S&P)
Baa1, Baa2, Baa3: Moody judges obligations rated Baa to be "moderate credit risk".[11] They are considered medium-grade and as such "protective elements may be lacking or may be characteristically unreliable".[12]
Speculative grade (also known as "High Yield" or "Junk")
Ba1, Ba2, Ba3: Moody judges obligations rated Ba to have "questionable credit quality."[12]
B1, B2, B3: Moody judges obligations rated B as speculative and "subject to high credit risk",[11] and have "generally poor credit quality."[12]
Caa1, Caa2, Caa3: Moody judges obligations rated Caa as of "poor standing and are subject to very high credit risk",[11] and have "extremely poor credit quality. Such banks may be in default..."[12]
Ca: Moody judges obligations rated Ca as "highly speculative"[11] and are "usually in default on their deposit obligations".[12]
C: Moody judges obligations rated C as "the lowest rated class of bonds and are typically in default,"[11] and "potential recovery values are low".[12]
Special
Short-term taxable ratings
P-1 Moody judges Prime-1 rated issuers as having "a superior ability to repay short-term debt obligations".[14]
P-2: Moody judges Prime-2 issuers as having "a strong ability to repay short-term debt obligations".[14]
P-3: Moody judges Prime-3 rated issuers as having "an acceptable ability to repay short-term obligations".[14]
NP: Moody considers "Not Prime" rated issuers as not falling "within any of the Prime rating categories".[14]
Moody notes that "Canadian issuers rated P-1 or P-2 have their short-term ratings enhanced by the senior-most long-term rating of the issuer, its guarantor or support-provider."[14]
[edit] Short-term tax-exempt ratings
Unlike S&P, Moody's has separate categories for short term municipal bonds. The ratings categories largely overlap, though, and have the same implications for the ability to repay short-term obligations.
[edit] Individual bank ratings
Moody's also rates each bank's financial strength.[12] These ratings differ from deposit ratings in that they measure how likely the bank is to need assistance from third parties.
A: "superior intrinsic financial strength"[15]
B: "strong intrinsic financial strength"[15]
C: "adequate intrinsic financial strength"[15]
D: :"modest intrinsic financial strength, potentially requiring some outside support at times"[12][15]
E: "very modest intrinsic financial strength, with a higher likelihood of periodic outside support"[12][15]