The company used research from its equity analysts, which include five-year forecasts of cash flows to evaluate statues, These are then compared with forecasts of liabilities coming due to provide ratings of creditworthiness. Morningstar's ratings rest on four key factors: business risk, cash-flow cushion, solvency score and distance to default.
The company provides the following credit ratings: AAA (extremely low default risk),
AA (very low default risk), A (low default risk), BBB (moderate default risk), BB (above average default risk), B (high default risk), CCC (currently very high default risk), CC (currently extreme default risk), C (imminent payment default) and D (payment default)
Morningstar Enters Credit Rating Biz
CHICAGO - Morningstar has ended a year of hints about its intentions and has started publishing credit ratings for about 100 of the largest U.S. companies with plans to expand that to 1,000 companies over the next year. Ratings are available for free at Morningstar.com with forecasts and scares available to institutional equity research clients.
