D (Credit Rating)

A D credit rating is the lowest possible rating assigned to a company or government by credit rating agencies like Standard & Poor’s, Moody’s, and Fitch. It indicates that the issuer has defaulted on its debt obligations, meaning it has failed to make interest or principal payments on time. A D rating reflects severe financial distress, and investors consider entities with this rating as having an extremely high risk of default or insolvency.

Example

A company that fails to meet its bond payment obligations may be downgraded to a D credit rating by a rating agency, signaling to investors that the company is in default.

Key points

• D is the lowest credit rating, indicating a default on debt obligations.

• Issuers with a D rating are in financial distress and pose a high default risk.

• It is assigned when a company or government fails to meet its debt repayment obligations.

Quick Answers to Curious Questions

What does a D credit rating signify?

A D credit rating signifies that the issuer has defaulted on its debt, failing to make required payments on time.

How does a D rating affect a company’s ability to borrow?

A D rating severely limits a company’s ability to borrow, as lenders and investors view it as highly risky and likely to default.

Can a company recover from a D rating?

Yes, if a company resolves its default situation and improves its financial health, it may be upgraded to a higher rating, but recovery can be difficult.