Understanding Ratings

Rating Outlook & Watch

Rating Outlook

A KBRA Rating Outlook is an indication of the likely direction of an issuer's rating over the medium term, generally encompassing a horizon not to exceed two years. Where assigned, Rating Outlooks can take on the following four states: Positive (POS), Negative (NEG), Stable (STA), and Developing (DEV).

The Rating Outlook is not necessarily a precursor to a rating change. Ratings may be changed regardless of the Rating Outlook status. Ratings placed on Watch indicate that the issuer has one or more ratings under review for possible change, and thus override the Outlook designation.

Watch Status

Placement of a KBRA rating on Watch status indicates that there is a meaningful potential for the rating to change in the direction of the Watch indicator. KBRA employs three possible Watch statuses: Upgrade (UP), Downgrade (DN), and Developing (DEV). KBRA will use reasonable efforts to conclude or update the rating Watch within 90 days of initiation.

Absence of Watch status does not preclude KBRA from changing a rating. Possible reasons for placement on Watch include: issue(r) specific developments, including changes in the actual or expected performance of a structured finance instrument or its underlying collateral, shifting industry patterns, macroeconomic changes or changes in the governing rating methodology.

A downloadable version of our Rating Scales and Services can be accessed here.