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URL:  https://boards.fool.com/sp-vs-moodys-ratings-27695990.aspx

Subject:  S&P vs. Moody's ratings Date:  5/21/2009  6:57 PM
Author:  WendyBG Number:  27583 of 36670

I have been constructing yield curves of different rated bonds, with the list taken from ZionsDirect, 1 to 5 year maturities, A+ or better (S&P) and Aa or better (Moody's).

Here is a comparison of the ratings. Moody's A rating is not equivalent to S&P's A rating. Moody's A is equivalent to the lowest investment grade of S&P, BBB.


Moody's S&P
Aaa AAA
Aa1 AA+
Aa2 AA
Aa3 AA-
Aa A+
A1 A
A2 A-
A3 BBB+
A BBB


I had a problem constructing the yield curve because S&P and Moody's give very different ratings to the same bonds. Look at the following list. You will see that Moody's A1 bonds have S&P ratings from AA down to A+.


Hsbc Hldgs Plc Listed 12/12/12 3.463 A1/ A+
International Business Ma Listed 06/15/13 3.39 A1/ A+
National Rural Utils Coop Make Whole Call Only 07/01/13 4.073 A1/ A+
Unilever Capital Corp Make Whole Call Only - Conditional Calls 02/15/14 3.313 A1/ A+
National Rural Utils Coop Make Whole Call Only 03/01/14 4.23 A1/ A+
Bhp Billiton Fin Usa Ltd Conditional Calls 04/01/14 3.714 A1/ A+
Wachovia Corp New Listed 10/15/11 3.858 A1/ AA
Wachovia Corp New Listed 10/15/11 3.805 A1/ AA
Wells Fargo & Co New Listed 10/23/12 4.236 A1/ AA
Wells Fargo & Co New Listed 10/23/12 3.896 A1/ AA
Wells Fargo & Co New Listed 01/31/13 4.387 A1/ AA
Wells Fargo & Co New Listed 01/31/13 4.226 A1/ AA
Wachovia Corp Global Mtn Listed 05/01/13 5.176 A1/ AA
Wachovia Corp Global Mtn Listed 08/01/13 5.176 A1/ AA
Allstate Life Global Fdg Listed 04/30/13 4.676 A1/ AA-
Allstate Life Global Fdg Listed 04/30/13 4.6 A1/ AA-
Medtronic Inc Make Whole Call Only 03/15/14 3.514 A1/ AA-
Medtronic Inc Make Whole Call Only 03/15/14 3.406 A1/ AA-
Northern Trust Corp 05/01/14 3.896 A1/ AA-
Boeing Cap Corp Make Whole Call Only - Listed - Conditional Calls 02/15/12 3.404 A2/ A+
Boeing Cap Corp Make Whole Call Only - Listed - Conditional Calls 01/15/13 3.778 A2/ A+
Target Corp Make Whole Call Only - Conditional Puts - Change of control 01/15/13 3.556 A2/ A+
Boeing Co Make Whole Call Only - Listed - Conditional Calls 02/15/13 3.401 A2/ A+
Boeing Co Make Whole Call Only - Listed - Conditional Calls 02/15/13 3.356 A2/ A+
Bristol-Myers Squibb Make Whole Call Only - Listed 08/15/13 3.312 A2/ A+
Boeing Co Make Whole Call Only - Listed 03/15/14 3.64 A2/ A+
Boeing Co Make Whole Call Only - Listed 03/15/14 3.464 A2/ A+
Midland Bk Plc Listed - Conditional Calls 03/15/11 4.746 A2/ AA-
Protective Life Secd Trs Listed 04/01/11 4 A2/ AA-
Wells Fargo & Co Listed 08/01/11 3.588 A2/ AA-
Protective Life Secd Trs Listed 09/28/12 6 A2/ AA-
Wells Fargo & Co New Listed 10/16/13 4.446 A2/ AA-
Wyeth Make Whole Call Only - Coupon Rate Adjusts When Quality Rating Changes 03/15/13 3.64 A3/ A+
Wyeth Make Whole Call Only - Coupon Rate Adjusts When Quality Rating Changes 03/15/13 3.459 A3/ A+
Wyeth Make Whole Call Only 02/01/14 3.94 A3/ A+
Wyeth Make Whole Call Only 02/01/14 3.836 A3/ A+
Wyeth Make Whole Call Only 02/01/14 3.77 A3/ A+
Baxter International Make Whole Call Only - Listed - Conditional Puts - Change of control 03/01/14 3.364 A3/ A+
Credit Suisse Usa Inc Make Whole Call Only - Listed - Conditional Calls 11/15/11 3.698 Aa1/ A+
Credit Suisse Usa Inc Make Whole Call Only - Listed - Conditional Calls 11/15/11 3.686 Aa1/ A+
Credit Suisse Usa Inc Make Whole Call Only - Listed - Conditional Calls 11/15/11 3.595 Aa1/ A+
Credit Suisse Usa Inc Make Whole Call Only - Listed - Conditional Calls 01/15/12 3.616 Aa1/ A+
Cs First Boston Ny Brh Sr 05/15/13 4.576 Aa1/ A+
Credit Suisse Usa Inc Conditional Calls 08/15/13 4.499 Aa1/ A+
Credit Suisse Usa Inc Conditional Calls 08/15/13 4.026 Aa1/ A+
Credit Suisse New York Br Conditional Calls 05/01/14 4.94 Aa1/ A+
Bp Capital Markets Plc Conditional Calls 05/08/14 3.655 Aa1/ AA
Bp Capital Markets Plc Conditional Calls 05/08/14 3.606 Aa1/ AA
Hydro-Quebec 02/01/13 4.001 Aa2/ A+
Hydro-Quebec 02/01/13 3.94 Aa2/ A+
Pepsico Inc Make Whole Call Only - Listed 03/01/14 3.32 Aa2/ A+
Bottling Group Llc Make Whole Call Only - Listed 03/15/14 3.701 Aa2/ A+
Bottling Group Llc Make Whole Call Only - Listed 03/15/14 3.665 Aa2/ A+
Wal Mart Stores Inc Listed 06/01/13 3.48 Aa2/ AA
Novartis Capital Corp Make Whole Call Only - Conditional Calls 02/10/14 3.314 Aa2/ AA-
Statoilhydro Asa Make Whole Call Only - Conditional Calls 04/15/14 3.602 Aa2/ AA-
Bank Of New York Mellon 05/15/14 3.925 Aa2/ AA-
Arden Rlty Ltd Partnershi Make Whole Call Only 11/15/10 3.558 Aa2/ AA+
General Elec Cap Corp Mtn Listed 11/15/11 3.697 Aa2/ AA+
General Elec Cap Corp Mtn Listed 11/15/11 3.35 Aa2/ AA+
General Elec Cap Corp Listed 02/15/12 4.386 Aa2/ AA+
General Elec Cap Corp Listed 02/15/12 4.15 Aa2/ AA+
General Elec Cap Corp Mtn Listed 03/03/12 3.5 Aa2/ AA+
General Elec Cap Corp Mtn Listed 04/10/12 4.368 Aa2/ AA+
General Elec Cap Corp Mtn Listed 04/10/12 4 Aa2/ AA+
General Elec Cap Corp Mtn Listed 04/10/12 3.883 Aa2/ AA+
General Elec Cap Corp Mtn Listed 06/15/12 4.512 Aa2/ AA+
General Elec Cap Corp Mtn Listed 06/15/12 4.476 Aa2/ AA+
General Elec Cap Corp Mtn Listed 06/15/12 3.6 Aa2/ AA+
General Elec Cap Corp Mtn Listed 06/15/12 3.552 Aa2/ AA+
General Elec Cap Corp Mtn Listed 10/19/12 4.523 Aa2/ AA+
General Elec Cap Corp Mtn Listed 10/19/12 4.44 Aa2/ AA+
General Electric Cap Corp Listed 01/15/13 4.75 Aa2/ AA+
General Electric Cap Corp Listed 01/15/13 4.706 Aa2/ AA+
General Electric Cap Corp Listed 01/15/13 4.486 Aa2/ AA+
General Electric Co Listed 02/01/13 3.946 Aa2/ AA+
General Electric Co Listed 02/01/13 3.914 Aa2/ AA+
General Electric Co Listed 02/01/13 3.743 Aa2/ AA+
General Electric Capital Listed 05/01/13 4.74 Aa2/ AA+
General Electric Capital Listed 05/01/13 4.426 Aa2/ AA+
General Elec Cap Corp Mtn Listed 09/20/13 4.676 Aa2/ AA+
General Electric Cap Corp Listed 05/13/14 5.446 Aa2/ AA+
Bear Stearns Cos Inc Listed 02/01/12 4.146 Aa3/ A+
Bear Stearns Cos Inc Mtn 08/10/12 4.176 Aa3/ A+
Jpmorgan Chase & Co Listed 05/01/13 4.19 Aa3/ A+
Jpmorgan Chase & Co Listed 05/01/13 3.776 Aa3/ A+
Southtrust Bk Birmgham Su 03/01/13 6.182 Aa3/ AA
Cme Group Inc Make Whole Call Only - Conditional Puts - Change of control 02/15/14 3.709 Aa3/ AA
U S Bancorp Mtns Bk Ent 05/15/14 4.023 Aa3/ AA
U S Bancorp Mtns Bk Ent 05/15/14 3.925 Aa3/ AA


For example:
Issue: Wachovia Corp Global Mtn Sr Nt 5.5% 2013 Listed
CUSIP/ISIN: 92976WBJ4/ US92976WBJ45
Price: 101.133 YTM: 5.176

Moody's Ratings Information
Long Term Rating: A1 effective 03/25/2009

S&P Ratings Information
Long Term Rating: AA effective 01/05/2009 13:55:38

CreditWatch: NEG effective 05/04/2009 14:39:31

Moody's rating is 3 rungs below S&P's. Although S&P has a negative credit watch on this, dropping it 3 rungs in just a few months seems...extreme.

I'm not sure what to make of this, or how to judge the risks.
Comments?

Wendy
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