B1/B+
What Is B1/B+?
B1/B+ is one of several non-investment grade credit ratings (otherwise called "junk") that might be assigned to a company, fixed-income security, or floating-rate loan (FRN). This rating implies that the issuer is generally risky, with a higher than average chance of default. B1/B+ are ratings just below investment grade but are the highest rating in the non-investment grade bracket.
Moody's Investors Service utilizes B1, while S&P Global Ratings and Fitch Ratings use B+.
Grasping B1/B+
The ratings assigned by the different ratings agencies are based fundamentally upon the issuer's creditworthiness. This rating can, consequently, be deciphered as a direct measure of the probability of default. Ratings generally fall into two categories: investment grade and non-investment grade. Bonds that receive a non-investment grade rating are otherwise called "junk bonds."
Credit ratings are issued fundamentally by three ratings agencies: Moody's, Standard and Poor's, and Fitch. Moody's purposes a combination of capitalized letters and numbers while S&P and Fitch utilized capitalized letters and plus and minus signs. For instance, a B1 rating in the Moody's system is equivalent to a B+ in the S&P/Fitch system.
Ratings are assigned to bonds, floating-rate loans, and companies as a whole. Long-term ratings, as well as short-term ratings, are issued. Short-term ratings follow an alternate scientific categorization. Credit ratings are likewise issued on government debt and follow a similar system utilized for rating corporations.
Long-term investment-grade ratings run from Aaa (Moody's) and AAA (S&P/Fitch), showing the most creditworthy bonds/loans or companies, to Baa3 (Moody's) and BBB-(S&P/Fitch). Non-investment grade ratings run from Ba1 (Moody's) and BB+ (S&P/Fitch) to C in the Moody's system, demonstrating the most minimal rating above default. The most minimal rating in the S&P/Fitch system is D for default.
Special Considerations
At the point when a company needs to issue a bond to fund-raise for any of many purposes, it regularly searches out the services of the rating agencies to assign their credit conclusions on the bond issue and the actual issuer. The ratings will aid the price discovery interaction of the bond when it is showcased to investors.
A B1/B+ rating is below investment-grade, once in a while alluded to as speculative, high-yield (HY), or junk. Hence, the yield on the bond is generally higher than on an investment-grade security to make up for the greater risk of payment default that the bond investor is taking on. The issue and issuer ordinarily have a similar rating, but they could be unique if, for instance, the issue is enhanced with extra credit protection for investors.
Highlights
- Moody's purposes the B1 rating, while S&P and Fitch use B+.
- B1/B+ are the highest quality speculative rating, followed Ba2/BB and Ba3/BB+.
- B1/B+ is a non-investment grade credit rating utilized by Moody's, S&P, and Fitch for an issued debt instrument (generally a bond) or the issuer of the credit (i.e., company or business).
- Companies ordinarily look for the services of a credit rating agency for ratings of new issues to help with transparency and price discovery for investors.
