Moody’s Investor Service is a credit rating agency that provides investors with credit ratings for debt. Moody’s Analytics provides software and tools that help with risk analysis and economic research. Learn how Moody’s can be a useful tool to help investors, organizations, and government entities understand and evaluate potential risk.
Definition and Example of Moody’s
Moody’s is a financial services company and the holding company for Moody’s Investor Service and Moody’s Analytics. In 1909, the company was founded by John Moody to produce manuals of statistics on stocks and bonds. In 2008, Moody’s Analytics was founded. The parent company continues to acquire new investments and expand its global footprint into areas such as real estate and cyber security. Moody’s operates in more than 40 countries and has more than 13,000 employees.
How Does Moody’s Work?
Moody’s Corporation is a financial services company and the parent company of Moody’s Investor Service and Moody’s Analytics. The company operated as Moody’s Investors Service until 2008, when it formed Moody’s Analytics. Let’s look at each company in more depth below.
Moody’s Investors Service
Moody’s Investors Service is a credit rating firm that employs more than 1,500 analysts to rate debt securities across a wide range of markets. Moody’s has rated more than $73 trillion in debt, including government and corporate bonds, fixed-income funds, and financial institutions.
Moody’s Analytics
Moody’s Analytics was established in 2008 to focus on non-credit rating activities such as economic research. The company offers software and tools to help companies understand and implement risk management. Moody’s Analytics also provides consulting and professional training for financial companies.
Types of Bond Ratings
Moody’s Investors Service provides credit ratings that inform investors on the probability of default and how severe those potential losses could be. The credit ratings are comparative, meaning they rank borrowers based on the likelihood of default and loss so investors can make broader comparisons. They do not indicate risk in absolute terms. These ratings are publicly available and cover a wide range of markets, industries, and geographies. The following table provides an overview of Moody’s bond ratings and what each one means. Of course, there is a risk of loss at every rating, including investment-grade ratings. But in general, the risk of loss increases as you move down the rating scale.
