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C (Credit Rating)

A C credit rating is a classification assigned by rating agencies to entities (corporations or governments) that are at a high risk of default or bankruptcy. This rating indicates that the entity is highly vulnerable and may not be able to meet its financial obligations. A C rating is just above D, which signifies actual default. Entities with a C rating are considered to have poor credit quality and face extreme financial difficulties, making them highly speculative investments.

Example

A company on the verge of bankruptcy may receive a C credit rating from agencies like Moody’s or S&P, signaling to investors that the firm is at risk of default and should be considered a highly speculative investment.

Key points

• A C credit rating indicates a high risk of default or financial distress.

• Assigned to entities with poor credit quality, just above a D rating (default).

• Considered highly speculative and requires higher returns for the associated risk.

Quick Answers to Curious Questions

It signifies that the investment is extremely risky, with a high likelihood of default, requiring investors to demand higher returns.

C-rated entities have significantly higher financial risk compared to those with higher credit ratings like BB or BBB, which indicate better financial health.

Factors include severe financial difficulties, poor cash flow, high debt levels, and an increased risk of bankruptcy or default.