A Change in Outlook Does Not Mean a Rating Upgrade

Every time news comes out about the latest rating reviews done by international rating agencies like Standard & Poor's, Moody's, or Fitch, I get irked by the inaccurate reporting that goes with the broadcasters and writers who bring us such news. Even if the result of the review just talks about a change in outlook, they usually say that the country's sovereign credit rating has been upgraded or downgraded.

A rating downgrade means that the rating has been changed downwards or we have been given a lower credit rating. A rating upgrade, on the other hand, means that the rating has been adjusted upwards or that we have been given a better credit rating. An outlook does not have anything to do with a change in credit rating. It just indicates what the direction of any change in rating might be in the near future. For more on this issue, please visit: http://www.angelicaviloria.com

We all want transparency and greater disclosure. We want to instill a credit rating culture in the Philippines where we channel funds to entities that are more creditworthy. To do that, we must start with a good understanding of what credit ratings are all about. To educate the public, we must start with educating media.

[By Angelica Viloria | Saturday, February 11, 2006]

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