Soilbuild Business Space REIT has recently issued SGD100 million 3.60% fixed rate notes due 2021. Moody’s has given the notes a definitive rating of Baa3.
Honestly, when I saw the “Baa3” rating, I did not understand what it means. I thought it must be something good. It is very common for REITS to issue notes for refinancing when its debt is due and often I see crediting rating agencies such as Moody’s give a rating for the notes issued.
After some research, I found the below scale used by Moody’s on its website. It is known as Global Long Term Rating Scale.
|Aaa||Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk.|
|Aa||Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.|
|A||Obligations rated A are judged to be upper-medium grade and are subject to low credit risk.|
|Baa||Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics.|
|Ba||Obligations rated Ba are judged to be speculative and are subject to substantial credit risk.|
|B||Obligations rated B are considered speculative and are subject to high credit risk.|
|Caa||Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk.|
|Ca||Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.|
|C||Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or interest.|
Note: Moody’s appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. Additionally, a “(hyb)” indicator is appended to all ratings of hybrid securities issued by banks, insurers, finance companies, and securities firms.*