Stock ratings

Securities rating agencies: what are they, and why are they relevant in the stock market?

The National Banking and Securities Commission (CNBV) has authorized entities known as securities rating institutions (ICVs). It analyzes, evaluates, and rules on an entity’s or financial issue’s creditworthiness.

Rating agencies are necessary for the stock market since they provide a credit rating for debt instruments or government bonds, which influences the confidence of investors to purchase their securities. Here you will be able to learn more about what they are, how many there are in Mexico, and the values they provide.Stock ratings

Securities rating services fall exclusively on authorized institutions. The power to provide these services is granted to corporations organized in accordance with the Securities Market Law and the General Provisions, as well as to what is not provided for by them in the provisions of the General Law of Commercial Companies. ​Stock ratings

The CNBV website states that rating agencies alert the market to investors’ real financial intermediation risks. They help companies seeking stock market listings understand their payment responsibilities and the issuer’s structural capacity and environment.

The CNBV supervises seven institutions of this type in Mexico:

Rating agencies must disclose their ratings, codes of conduct, methodology, and credit quality on their websites.Investors must know major developments.stock ratings

ICV ratings range from AAA to D.Agency ratings differ.AAA-rated issuers are financially stable and risk-free.

At the other extreme are BBB and B ratings, which mark a separation between investment and speculative grades. While those of type D indicate default or that the issuers are not able to pay. However, the CNBV recommends consulting the scales of each of the rating agencies on their respective websites.Stock ratings

Institutions award perspectives in three categories:

ICV ratings are credit quality assessments, not stock recommendations.

ICVs offer investors with trustworthy information to make investment decisions, which benefits the stock market and the country.

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