Credit Rating Agencies—NRSROs

A credit rating agency is a firm that provides its opinion on the creditworthiness of an entity and the financial obligations (such as, bonds, preferred stock, and commercial paper) issued by an entity. Generally, credit ratings distinguish between investment grade and non-investment grade. For example, a credit rating agency may assign a "triple A" credit rating as its top "investment grade" rating for corporate bonds and a "double B" credit rating or below for "non-investment grade" or "high-yield" corporate bonds.

Credit rating agencies registered as such with the SEC are known as “Nationally Recognized Statistical Rating Organizations.” There are ten firms currently registered as NRSROs:

• A.M. Best Company, Inc.
• DBRS Ltd.
• Egan-Jones Rating Company
• Fitch, Inc.
• Japan Credit Rating Agency, Ltd.
• Kroll Bond Rating Agency, Inc. (f/k/a LACE Financial Corp.)
• Moody’s Investors Service, Inc.
• Rating and Investment Information, Inc.
• Realpoint LLC
• Standard & Poor’s Ratings Services

Under the Credit Rating Agency Reform Act, an NRSRO may be registered with respect to up to five classes of credit ratings: (1) financial institutions, brokers, or dealers; (2) insurance companies; (3) corporate issuers; (4) issuers of asset-backed securities; and (5) issuers of government securities, municipal securities, or securities issued by a foreign government.

To learn more about NRSROs, please visit the Division of Trading and Markets’ web page on NRSROs. There you can find a variety of background materials, including SEC releases, transcripts of hearings and selected No-Action letters by SEC staff.