Attachment 3
Aaa
Bonds and preferred stock which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.
Aa
Bonds and preferred stock which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risk appear somewhat larger than the Aaa securities.
A
Bonds and preferred stock which are rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment some time in the future.
Baa
Bonds and preferred stock which are rated Baa are considered as medium-grade obligations (i.e., they are neither highly protected nor poorly secured). Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.
Ba
Bonds and preferred stock which are rated Ba are judged to have speculative elements; their future cannot be considered as well-assured. Often the protection of interest and principal payments may be very moderate, and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.
B
Bonds and preferred stock which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.
Caa
Bonds and preferred stock which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.
Ca
Bonds and preferred stock which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.
C
Bonds and preferred stock which are rated C are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.
Moody"s assigns ratings to individual debt securities issued from medium-term note (MTN) programs, in addition to indicating ratings to MTN programs themselves. Notes issued under MTN programs with such indicated ratings are rated at issuance at the rating applicable to all pari passu notes issued under the same program, at the program"s relevant indicated rating, provided such notes do not exhibit any of the characteristics listed below. For notes with any of the following characteristics, the rating of the individual note may differ from the indicated rating of the program:
1) Notes containing features which link the cash flow and/or market value to the credit performance of any third party or parties.
2) Notes allowing for negative coupons, or negative principal.
3) Notes containing any provision which could obligate the investor to make any additional payments.
Market participants must determine whether any particular note is rated, and if so, at what rating level. Moody"s encourages market participants to contact Moody"s Ratings Desks directly if they have questions regarding ratings for specific notes issued under a medium-term note program.
Note: Moody"s applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category.
AAA
An obligor rated `AAA" has EXTREMELY STRONG capacity to meet its financial commitments. `AAA" is the highest Issuer Credit Rating assigned by Standard Poor"s.
AA
An obligor rated `AA" has VERY STRONG capacity to meet its financial commitments. It differs from the highest rated obligors only in small degree.
A
An obligor rated `A" has STRONG capacity to meet its financial commitments but is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligors in higher-rated categories.
BBB
An obligor rated `BBB" has ADEQUATE capacity to meet its financial commitments. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitments.
Obligors rated `BB", `B", `CCC", and `CC" are regarded as having significant speculative characteristics. `BB" indicates the least degree of speculation and `CC" the highest. While such obligors will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions.
BB
An obligor rated `BB" is LESS VULNERABLE in the near term than other lower-rated obligors. However, it faces major ongoing uncertainties and exposure to adverse business, financial, or economic conditions which could lead to the obligor"s inadequate capacity to meet its financial commitments. B An obligor rated `B" is MORE VULNERABLE than the obligors rated `BB", but the obligor currently has the capacity to meet its financial commitments. Adverse business, financial, or economic conditions will likely impair the obligor"s capacity or willingness to meet its financial commitments.
B
An obligation rated `B" is more vulnerable to nonpayment than obligations rated `BB", but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor"s capacity or willingness to meet its financial commitment on the obligation.
CCC
An obligor rated `CCC" is CURRENTLY VULNERABLE, and is dependent upon favorable business, financial, and economic conditions to meet its financial commitments.
CC
An obligor rated `CC" is CURRENTLY HIGHLY-VULNERABLE.
Plus (+) or minus(-) The ratings from `AA" to `CCC" may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.
C
A subordinated debt or preferred stock obligation rated `C" is CURRENTLY HIGHLY VULNERABLE to nonpayment. The `C" rating may be used to cover a situation where a bankruptcy petition has been filed or similar action taken, but payments on this obligation are being continued. A `C" also will be assigned to a preferred stock issue in arrears on dividends or sinking fund payments, but that is currently paying.
R
An obligor rated `R" is under regulatory supervision owing to its financial condition. During the pendency of the regulatory supervision the regulators may have the power to favor one class of obligations over others or pay some obligations and not others. Please see Standard & Poor"s issue credit ratings for a more detailed description of the effects of regulatory supervision on specific issues or classes of obligations.
SD and D
An obligor rated `SD" (Selective Default) or `D" has failed to pay one or more of its financial obligations (rated or unrated) when it came due. A `D" rating is assigned when Standard & Poor"s believes that the default will be a general default and that the obligor will fail to pay all or substantially all of its obligations as they come due. An `SD" rating is assigned when Standard & Poor"s 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. Please see Standard & Poor"s issue credit ratings for a more detailed description of the effects of a default on specific issues or classes of obligations.
N.R.
An issuer designated N.R. is not rated.
Public Information Ratings
Ratings with a `pi" subscript are based on an analysis of an issuer"s published financial information, as well as additional information in the public domain. They do not, however, reflect in-depth meetings with an issuer"s management and are therefore based on less comprehensive information than ratings without a `pi" subscript. Ratings with a `pi" subscript are reviewed annually based on a new year"s financial statements, but may be reviewed on an interim basis if a major event occurs that may affect the issuer"s credit quality.
Outlooks are not provided for ratings with a `pi" subscript, nor are they subject to potential CreditWatch listings. Ratings with a `pi" subscript generally are not modified with `+" or `-` designations. However, such designations may be assigned when the issuer"s credit rating is constrained by sovereign risk or the credit quality of a parent company or affiliated group.