Credit rating agencies (CRAs) are of consequence far beyond the world of finance. Before the global financial crisis (GFC) few outside academia and the financial industry had heard of them, but their role in the credit crunch of 2008 catapulted them onto the front pages of newspapers, where their practices became an issue for scrutiny. As time has passed, and the catastrophe of the systemic global financial crisis of 2008 has receded into history, lessons about the far- reaching relevance of key financial market actors, such as credit rating agencies, have faded. Once investment bankers, accountancy companies, private equity firms, hedge funds and other creatures associated with Wall Street and “casino capitalism” (Strange 1986) disappear from the pages of the major media outlets, policy- makers, the general public and large sections of academia relegate issues pertinent to finance to a technicality, leaving deeper analytical engagement to specialists, quants or experts. The ambition of this book is to bring credit rating agencies and their role in the economy back into focus, offering a more holistic understanding of the agencies and their ratings. In addition to introducing basic and important terms and concepts, this book pays tribute to the often neglected political and social dimension of the agencies’ work and the authority that comes with it.

Credit rating agencies are private firms, whose core business is to assess the creditworthiness of debt issuers on financial markets. The famous alphanumeric codes, such as AAA, BB+ and Baa3, can decide the fate of a company or a whole country. The long- standing credit rating agency oligopoly of the Big Three – namely Standard & Poor's Global Ratings, Moody's Investors Service and Fitch Ratings – dominates the global rating market.

Financial products that carry ratings, in most cases, involve some type of debt issuance by funding- seeking entities. “Bonds” represent the most common form of such products. The related debt can be issued by a number of entities: private companies (corporates), financial institutions (banks), governments (sovereigns), supranationals (e.g. the World Bank Group) and subnational institutions (e.g. municipalities). When these entities seek access to capital markets in order to satisfy their funding needs, the assigned rating signals to investors the extent to which the debt issuer is “creditworthy” – literally, “worthy” of receiving capital.