{"id":28414,"date":"2017-02-21T17:10:07","date_gmt":"2017-02-21T09:10:07","guid":{"rendered":"http:\/\/www.imoney.my\/articles\/?p=28414"},"modified":"2017-02-21T17:10:07","modified_gmt":"2017-02-21T09:10:07","slug":"credit-ratings-important-for-malaysia","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/credit-ratings-important-for-malaysia","title":{"rendered":"Why Should Malaysians Pay Attention To The Country\u2019s Credit Ratings?"},"content":{"rendered":"

Every once in a while you will come across headlines such as \u201cS&P reaffirms Malaysia\u2019s currency rating, outlook stable\u201d<\/a> or \u201cMoody’s Cuts Malaysia Credit-Rating Outlook on Weaker Finances\u201d.<\/a><\/p>\n

Credit ratings, as these metrics as known, are usually seen in the wider context of the country\u2019s economic health, so it is unsurprising that after breaking such news, economists and politicians will weigh in on the implications of what it means to either be graded an \u201cA+\u201d or a \u201cBBB\u201d or even \u201cjunk\u201d.<\/p>\n

But what are these letters and what significant impact do they make in determining the everyday life of the common folk\u2026 people like us? In essence: are they important? We take a look.<\/p>\n

<\/span>What are credit ratings?<\/strong><\/span><\/h2>\n

Similar to how our personal credit rating works, credit ratings are a service to investors, letting them know how likely a borrower is to repay their debts.<\/p>\n

The companies that issue these ratings are known as rating agencies. There are about 70 rating agencies<\/a> worldwide and it is the most concentrated industry.<\/p>\n

Most investors, however, base their decisions on ratings published by Moody\u2019s, S&P and Fitch. They control about 95% of the rating business.<\/p>\n

<\/p>\n

Ratings assigned to an entity are comparable across international borders. The three sectors and types of ratings that may be assigned are:<\/p>\n

Sovereigns and Local Government<\/strong><\/p>\n