What is an investment scale?

The rating scale is used to assess the solvency and / or weakness of the shares offered by investment companies. investment in the titles or securities that make up your investment portfolio, according to the judgment of the rating companies values. This qualification is by means of letters and numbers:

The letters are used to qualify the capacity and payment opportunity of the issuer of the instruments or securities that make up your investment portfolio.
The numbers are used to measure the market risk in the performance of the investment company, in the event of changes in interest rates or exchange rates.

The rating scale is expressed under terms and conditions as follows:

• Credit Quality. The quality and diversification of the assets of the investment portfolio, strengths and weaknesses of the administration and operational capacity:
• Outstanding AAA This is the highest grade, and indicates that the issuer has a very strong ability to service its debt.
• High AA The issuer has a strong ability to pay, it differs in a degree from the highest category.
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• A good It is more susceptible to adverse effects due to changes in the economy.
• Acceptable BBB Has adequate ability to pay, but adverse conditions could lead to weak ability to pay.
• Low BB Has the least vulnerability to default in the short term. It has a greater risk exposure to adverse financial conditions, the business or the economy that would cause an inadequate payment capacity.
• B minimum It is more vulnerable to default even when they have sufficient capacity to meet their commitments.
• CCC Identifies a possibility of default of payment, it depends on the business conditions of the financial situation or the economy to be able to comply.
• CC High susceptibility of not being paid.
• D They are issues that have ever defaulted on payments or have been declared bankrupt.

Degree of Vulnerability in the Market. It is the sensitivity to changing conditions in market factors:
1. Low sensitivity to changing conditions in market factors.
2. Moderate sensitivity to changing conditions in market factors.
3. High sensitivity to changing conditions in market factors.
4. Very high sensitivity to changing conditions in market factors.

Many times we will see these categories with a plus (+) or minus (-) sign, in order to highlight their strength or weakness.

For example, if the investment portfolio you acquired has a rating of AA2, it means that there is a strong payment capacity of the issuer and it presents certain vulnerability in the values.