Fitch vs. Moody's

Attribute	Fitch	Moody's
Rating Scale	AAA to D	Aaa to C
Number of Ratings	21	21
Global Coverage	Yes	Yes
Founded	1913	1909
Ownership	Subsidiary of Hearst Corporation	Subsidiary of Moody's Corporation

Introduction

When it comes to credit rating agencies, two of the most well-known names in the industry are Fitch Ratings and Moody's Investors Service. Both companies play a crucial role in providing investors and issuers with credit ratings that help determine the creditworthiness of various entities. While they have similar goals, there are some key differences between Fitch and Moody's that investors should be aware of.

History

Fitch Ratings was founded in 1913 by John Knowles Fitch and has since grown to become one of the "Big Three" credit rating agencies, along with Moody's and Standard & Poor's. Moody's Investors Service, on the other hand, was established in 1909 by John Moody and is also considered one of the leading credit rating agencies in the world. Both companies have a long history of providing credit ratings to investors and issuers.

Global Presence

One of the key differences between Fitch and Moody's is their global presence. Fitch Ratings has offices in major financial centers around the world, including New York, London, Hong Kong, and Singapore. This global footprint allows Fitch to provide credit ratings for a wide range of entities across different regions. Moody's Investors Service also has a global presence, with offices in over 40 countries. This extensive network enables Moody's to offer credit ratings for entities in various markets.

Rating Methodology

Both Fitch and Moody's use a similar methodology to determine credit ratings, which involves analyzing various factors such as financial performance, industry trends, and economic conditions. However, there are some differences in the way they approach credit ratings. Fitch Ratings is known for its transparent and forward-looking approach to credit analysis, while Moody's is often perceived as more conservative in its ratings. This can lead to differences in credit ratings between the two agencies for the same entity.

Industry Focus

Another difference between Fitch and Moody's is their industry focus. Fitch Ratings has a strong presence in the financial services sector and is known for its expertise in rating banks and insurance companies. Moody's Investors Service, on the other hand, has a broader industry focus and provides credit ratings for a wide range of sectors, including corporate issuers, governments, and structured finance products. Investors should consider the industry expertise of each agency when evaluating credit ratings.

Regulatory Oversight

Both Fitch and Moody's are subject to regulatory oversight by various authorities around the world. In the United States, they are regulated by the Securities and Exchange Commission (SEC) and are required to adhere to strict guidelines for credit rating agencies. This regulatory oversight helps ensure the integrity and reliability of credit ratings issued by Fitch and Moody's. Investors can have confidence in the ratings provided by these agencies due to the regulatory scrutiny they undergo.

Conclusion

In conclusion, Fitch Ratings and Moody's Investors Service are two of the most prominent credit rating agencies in the world. While they have similar goals of providing investors and issuers with credit ratings, there are some key differences between the two agencies. From their history and global presence to their rating methodology and industry focus, investors should consider these factors when evaluating credit ratings from Fitch and Moody's. Ultimately, both agencies play a crucial role in the financial markets and provide valuable insights for investors.