Ratings Diversification

Credit risk assessment, pricing, and structuring for syndicated loans

S&P Global Ratings’ Loan & Recovery Ratings

S&P Global Ratings’ loan ratings are widely used in the loan market for credit risk assessment, pricing, and structuring of syndicated loans. A loan rating is the issue-specific rating assigned to a borrower’s syndicated loan. These ratings give the market an important recovery assessment.

Recovery ratings are used in a variety of ways in the collateralized loan obligation (CLO) market. They are an integral input into S&P Global Ratings’ CLO analysis and ratings. CLO asset managers may use recovery ratings as a key consideration in trading decisions as it relates to their portfolio parameters. CLO investors may use recovery ratings to monitor the overall expected recovery of their portfolio of leveraged loans. 

S&P Global Ratings has assigned ratings on syndicated loans since 1996 across different sectors and borrower types, including investment-grade, speculative-grade, infrastructure, and project-finance loans. S&P Global Ratings currently rates syndicated loans of close to 2,100 borrowers totaling more than $2.5 trillion.(1)

S&P Global Ratings: Bank Loan Ratings Revenue

(dollars in millions)

150 300 450 $600 Q4 Q3 Q1 ’13 $208 ’14 $235 ’15 $206 ’16 $262 ’17 $366 ’18 $380 ’19 $310 ’20 $83 $65 $84 $78 $94 $86 $44 $57 ’21 $148 $157 $125 $146 Q2 $281 $577

Why Clients Obtain Loan Ratings 

Efficient and transparent market pricing
Increased liquidity in the secondary loan market
Investor base broadened to new classes of lenders
Quick assessment of the effect of a loan rating resulting from contemplated changes to a borrower’s capital structure
Improved terms and efficiencies with vendors 
Third-party, unbiased recovery assessment in a heightened regulatory and credit risk environment

Loan Ratings Process

In the loan ratings process, S&P Global Ratings reviews revolving lines of credit, first-lien term loans, second-lien term loans, and other subordinated debt. Leveraged loan ratings are accompanied by a full recovery rating analysis based on S&P Global Ratings’ ratings scale and methodology.

The table below illustrates how a recovery rating is used to adjust the Issuer Credit Rating, the anchor rating in the loan process, for an issuer with a speculative-grade issuer credit rating.

Recovery RatingRecovery DescriptionNominal RecoveryIssue-Level Rating Notched from Issuer Credit Rating
1+Highest expectation for full recovery100%+3 notches
1Very high recovery90%–100%+2 notches
2Substantial recovery70%–90%+1 notch
3Meaningful recovery50%–70%0 notches
4Average recovery30%–50%0 notches
5Modest recovery10%–30%-1 notch
6Negligible recovery0%–10% -2 notches

Note:  Recovery ratings are capped in certain countries to adjust for reduced creditor recovery prospects in these jurisdictions. The table applies to 23 countries designated as Jurisdiction A by S&P Global Ratings.

S&P Global Ratings’ loan ratings offer an industry-wide recognized gauge of creditworthiness


Data based on bank loans outstanding as of 1/1/2022. Spans corporate, financial institutions, insurance, and non-U.S. Excludes revolving bank facilities.