What does credit outlook mean?

Classroom

oi-Monika Nihalani

By Monika Nihalani

Published: Tuesday, August 9, 2011, 12:46 [IST]

Rating agencies also provide outlook for the countries. Outlook provided by the rating agencies assesses the potential direction in which a rating will move over the next six months to two years.

• Positive - may be raised
• Negative - may be lowered
  
• Stable - unlikely to change
  
• Developing - may be raised or lowered
  
• NM - not meaningful
  

Lowering an outlook is generally considered to be the first step towards a downgrade.

For instance, Credit rating agency Moody's still has maintained AAA credit rating for U.S. for the time being but lowered its outlook on U.S. debt to "negative."

A "negative outlook" indicates the possibility that Moody's would downgrade the country's sovereign credit rating within a year or two.