Interpreting S&P Sovereign Rating Suffixes and Default Codes
Summary
The document clarifies two S&P sovereign-rating notations. The suffix “u” identifies an unsolicited rating, meaning the rating was initiated by a party other than the issuer or its agents. “SD” means selective default: the agency considers the obligor to have defaulted on a particular issue or class of obligations while still expecting timely payment on other obligations. It also notes that a distressed exchange offer can lead to an SD or D rating.
These definitions help readers interpret sovereign foreign-currency debt ratings and distinguish a selective default from a broader default designation. The material is a terminology explanation supported by cited rating-agency definitions and an example in which the suffix appears alongside a rating. It does not analyze the reliability or market impact of ratings, explain the full rating scale, or provide a method for predicting credit events. Users applying the definitions should consult the agency’s current published criteria, since rating symbols and methodologies may be updated.
Key ideas
- The “u” suffix identifies a rating initiated without a request from the issuer or its agents.
- “SD” denotes selective default on a specific issue or class of obligations.
- An SD-rated obligor may still meet payment obligations on its other issues in a timely way.
- A distressed exchange offer can result in an SD or D rating.
- The document defines rating codes but does not assess their predictive value.
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# S&P's Sovereign Ratings: Clarification on Definitions and Symbols # S&P's Sovereign Ratings: Clarification on Definitions and Symbols Similar to an earlier question, I am now looking at S&P's sovereign ratings. Here, as in the case of Moody's, a few things are unclear to me in terms of the definitions used by Standard & Poor's. - Several sovereign ratings (Foreign Currency LT Debt, obtained through `CSDR` in Bloomberg Terminal), contain a suffix `u`. For the case of Belgium, example given, ratings are denoted as `AAu` or `AA+u`. What does the `u` stand for? - What does the rating `SD` stand for? ## Answer by adam (score 2, accepted) https://quant.stackexchange.com/a/10368 SD is selective default http://www.reuters.com/article/2013/06/28/us-cyprus-downgrade-standardandpoors-idUSBRE95R0YQ20130628 +u is unsolicited rating http://lexicon.ft.com/Term?term=unsolicited-rating ## Answer by Peacock (score 2) https://quant.stackexchange.com/a/30959 Credit rating agencies all disclose their codes (and a general methodology) online. "The 'u' identifier and 'unsolicited' designation are assigned to credit ratings initiated by parties other than the issuer or its agents, including those initiated by S&P Global Ratings." "SD: An obligor rated 'SD' (selective default) or 'D' is in default... an 'SD' rating is assigned when S&P Global Ratings believes that the obligor has selectively defaulted on a specific issue or class of obligations but it will continue to meet its payment obligations on other issues or classes of obligations in a timely manner. An obligor's rating is lowered to 'D' or 'SD' if it is conducting a distressed exchange offer." Source: https://www.standardandpoors.com/en_AU/web/guest/article/-/view/sourceId/504352
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