A rating agency is a specialized independent organization that evaluates the creditworthiness of companies, banks, governments, and financial instruments such as bonds. These agencies assign ratings that help investors understand the level of risk associated with investing in certain securities or providing credit.

Ratings assigned by agencies are an important tool for financial market participants as they help determine the likelihood that the issuer will fulfill its financial obligations (e.g., paying interest on bonds or repaying borrowed funds). These ratings are usually expressed in a letter scale, ranging from AAA (highest rating) to D (default).

Notable international rating agencies include:

• Moody’s Investors Service (Moody’s)

• Standard & Poor’s (S&P)

• Fitch Ratings

These agencies use their methodologies to analyze a range of factors such as the company’s financial condition, the economic situation in the country, market risks, and other aspects that may affect the issuer’s ability to meet its obligations. The ratings assigned by these agencies are widely used by banks, funds, governments, and other market participants for risk assessment and management.