Credit rating agencies use “Credit Watch”, “Watchlist” or “Rating Watch” in addition to ratings outlooks to indicate its view regarding the degree of likelihood of a rating change and, in most cases, the probable direction of that change.
A watchlisting highlights the potential direction of a short- or long-term rating. It focuses on identifiable events and short-term trends that may cause ratings to be placed under special surveillance. These may include mergers, recapitalizations, voter referendums, regulatory action, performance deterioration of securitized assets, or anticipated operating developments.
Ratings may be placed on a list when such an event or a deviation from an expected trend occurs and analysts believe that additional information is necessary to evaluate the current rating or when there is, in their opinion, a material change in the performance of securitized assets and the magnitude of the rating impact has not been fully determined.
A watchlisting, however, does not mean a rating change is inevitable, and when appropriate, a range of potential alternative ratings that we believe could result will be shown. A watchlisting is not intended to include all ratings under review, and rating changes may occur without the ratings having first appeared on a list.
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