Short-Term and Long-Term Rating Relationships

This Short-Term and Long-Term Ratings Relationship Document (“Document”) examines the rationale for Morningstar DBRS’ use of two different credit rating scales for rating short- and long-term obligations1, the similarities and contrasts involved in the use of the scales, and the resulting relationship that exists.

Note that: (1) While short-term debt can encompass a variety of different securities, this Document references the most common, commercial paper (CP), which consists of unsecured promissory notes of less than one year in duration. (2) When discussing the mapping that exists between short- and long-term credit ratings for Corporate issuers, the long-term credit rating is typically the most senior unsecured credit rating of the entity in question or the issuer rating, such that its legal ranking would be equivalent to CP. (3) The bulk of the comments made in this Document deal with “corporate” credits. There are nuances in the area of Structured Finance, which are discussed in the last section.