What Is Ba2/BB?
Ba2/BB are rating assignments involved by the top credit rating agencies for a credit issue or issuer that imply higher degrees of default risk on their rating ranges. Moody's Investors Service utilizes Ba2, while S&P Global Ratings and Fitch Ratings use BB.
Ba2/BB are ratings below investment grade yet are the second-highest rating in the non-investment grade (junk or high-yield) bracket.
Figuring out Ba2/BB
The Ba2/BB rating, as well as any remaining ratings set by the agencies, have descriptive rules. Ratings apply to both the credit instrument that is issued and the issuer of the credit instrument.
Ba2/BB Rating for an Issue
For Moody's, an issue rated Ba2 is decided to be speculative and is subject to substantial credit risk. The modifier '2' shows that the obligation positions in its generic rating category — being one score below Ba1 and one step above Ba3.
For S&P, an issue rated BB is viewed as having "critical speculative attributes" and "while such obligations will probably have a few quality and protective attributes, these might be offset by large uncertainties or major exposures to adverse conditions." The BB rating for S&P is one score below BB+ and one step above BB-.
Fitch notes that its BB rating means the issue is powerless to changes in the business or economy. The Fitch rating system follows the S&p's, where BB is one score below BB+ and one above BB-.
Ba2/BB Rating for an Issuer
For Moody's, issuers assessed Ba2 are decided to be speculative and are "subject to a substantial risk of defaulting on certain senior operating obligations and other contractual commitments."
Albeit considered non-investment grade, the Ba2/BB rating is the second-highest rating in the speculative class — behind just Ba1/BB+.
For S&P bond rating agencies, an obligor rated BB faces "major continuous uncertainties and exposure to adverse business, financial or economic conditions, which could lead to the obligor's lacking capacity to meet its financial commitments." The Fitch system says that BB ratings show there is default risk, especially in the event that a business or economic conditions change, yet the business has the flexibility to service its current obligations.
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 feelings on the bond issue and the issuer itself. The ratings will aid the price discovery cycle of the bond when it is promoted to investors.
A Ba2/BB rating is below investment-grade or once in a while alluded to as high-yield or junk. Accordingly, 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 generally have a similar rating, however they could be unique if, for instance, the issue is enhanced with extra credit protection for investors. The bond might be rated Ba1/BB+, a tier higher, with the issuer staying at Ba2/BB.
- Moody's purposes the Ba2 rating, while S&P and Fitch use BB.
- Ba2/BB are credit ratings just below investment grade, considered more speculative.
- Ba2 falls over the Ba3 rating and below Ba1, while BB is above BB-and below BB+.
- Companies commonly look for the services of a credit rating agency for ratings of new issues to help with transparency and price discovery for investors.