Apart from rating an entity, credit rating agencies also provide an outlook for the rating. The outlook which is now expressed as positive, stable or negative is an indication of direction of rating in the foreseeable future. (Change in rating is technically known as rating migration.)
Thus, positive outlook is indicative that the rating is more likely to be revised upwards in the foreseeable future rather than being retained or downgraded. Similarly, negative outlook denotes the greater likelihood of downward revision. Stable outlook connotes the greater likelihood of the rating being retained when the periodic revision is due.
Sometimes we come across an entity (company or country) whose immediate or foreseeable future is likely to be different from the present but it is difficult to say whether it will be a positive development or negative development. In other words, change is likely but the direction of change is unpredictable. Such an outlook may better be called 'unstable'. So, credit rating agencies may assess the need for widening the basket of outlook by including 'unstable'.
Thus, positive outlook is indicative that the rating is more likely to be revised upwards in the foreseeable future rather than being retained or downgraded. Similarly, negative outlook denotes the greater likelihood of downward revision. Stable outlook connotes the greater likelihood of the rating being retained when the periodic revision is due.
Sometimes we come across an entity (company or country) whose immediate or foreseeable future is likely to be different from the present but it is difficult to say whether it will be a positive development or negative development. In other words, change is likely but the direction of change is unpredictable. Such an outlook may better be called 'unstable'. So, credit rating agencies may assess the need for widening the basket of outlook by including 'unstable'.
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