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There are three major ratings agencies which have made a business out of assessing the credit risk of companies, parastatals and governments worldwide. They are Fitch, Moodys and Standard & Poors. All three are very highly regarded by the international financial community. They undertake a careful examination of the risks involved in the debt instruments of a wide variety of entities - basically any organisation which raises capital by selling bonds through an organised exchange. The highest rated debt is triple A and is usually the bonds of first world countries like the United States, Germany or England. The debt of emerging economies like South Africa, Brazil or Turkey are usually accorded a much lower rating - which has become known as "junk status". The further down an organisation is rated the higher the rate of interest they must pay to attract investors. The ratings agencies are constantly re-evaluating the risks of every organisation whose debt they rate. Thus in February 2020 Moody's finally downgraded South African government bonds to junk status. The other two ratings agencies had rated South African debt at junk for some time. Each level in the rating scale comes with an outlook which is positive, neutral or negative. A negative rating means that the agency believes that the debt will be down-graded at its next assessment. The ratings agencies give detailed reasons for changes in their ratings and often encourage governments and organisations to undertake reforms in order to improve their ratings. It is obviously in the interest of any country to try to improve its ratings so that it will have to pay less interest on its debt.

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