Moody's is a global credit rating agency (institution) and financial services company, operating as a division of the American firm Moody's Corporation. It is one of the Big Three credit rating agencies, alongside Standard & Poor's (S&P) and Fitch Group.
The company traces its origin to 1900, when John Moody published his first market assessment, Moody's Manual of Industrial and Miscellaneous Securities. Moody founded the company in 1909 to produce manuals and bond ratings, solving the problem of a lack of centralized, reliable information for investors by providing a "simple system of gradation" for securities.
The core mechanism of Moody's Ratings is assigning forward-looking opinions on the relative credit risk of debt obligations issued by entities like governments and corporations. It uses a standardized scale for long-term debt, ranging from Aaa (highest quality) to C (lowest quality, typically in default). For ratings between Aa and Caa, numerical modifiers 1, 2, and 3 are appended, with 1 indicating the higher end of the category. The final rating is determined by a rating committee using published methodologies and analysis of both quantitative and qualitative factors.
Moody's is closely connected to the global capital markets, as its ratings are used by banks and investors to assess the credit risk of securities. The parent company, Moody's Corporation, also includes Moody's Analytics, a separate division that provides financial analysis software and services. A recent change occurred in March 2024, when the credit ratings division, formerly known as Moody's Investors Service, was rebranded to Moody's Ratings.