Standard & Poor's (S&P)

The corporation Standard & Poor's (S&P) is well recognized around the world for producing financial market indexes that are frequently used as investment benchmarks, serving as a data source, and issuing credit ratings for companies and debt obligations. It is most well-known for the well-liked and frequently mentioned S&P 500 Index.

Understanding Standard & Poor's (S&P) 

Standard & Poor's has a rich history, emerging from the merger of two firms: Poor's Publishing, which published railway industry guides in 1868, and the Standard Statistics Bureau, established in 1906. The merger in 1941 formed Standard & Poor's, which was later acquired by McGraw-Hill in 1966. Over time, it expanded its operations, offering a range of financial services, including credit ratings and market indices.

S&P Global is divided into several divisions, such as S&P Global Ratings, S&P Global Market Intelligence, S&P Dow Jones Indices, and S&P Global Platts. It employs over 1,500 credit analysts and has issued millions of credit ratings on governments, corporations, and securities worldwide.

Standard & Poor's Indexes 

The S&P 500 Index, launched in 1957, is one of S&P's flagship products. Comprising 500 of the largest U.S. stocks, it serves as a barometer for the overall health of the American economy. Other popular indices offered by S&P Global cover various market sectors and capitalizations, providing investors with insights into different segments of the market.

S&P 500 Index Futures 

Chicago Mercantile Exchange (CME) introduced the first S&P 500 futures contracts in 1982, allowing investors to speculate on the index's future performance. Over time, different contract sizes, including the E-mini and micro E-mini contracts, were introduced to cater to different investor needs. These futures contracts offer liquidity and allow investors to gain exposure to the S&P 500 without owning individual stocks.

Standard & Poor's Underlying Ratings (SPURs) 

Standard & Poor's Underlying Ratings (SPURs) assess a municipality's credit quality independently of any credit enhancements. Municipal bonds often include credit enhancements to improve terms, but SPURs focus solely on the issuer's creditworthiness. These ratings provide valuable information for investors considering municipal bond investments.

Example of Standard & Poor's Ratings 

S&P Global Ratings assigns credit ratings to debt instruments and issuers based on their creditworthiness. Ratings range from AAA to D, indicating the likelihood of default or timely repayment. Investment-grade ratings (BBB and above) represent safer investments, while speculative ratings (below BBB) carry higher risk.

What Does Standard & Poor's Mean? 

Standard & Poor's, now known as S&P Global, is a leading provider of financial information and analytics. It offers a range of services, including credit ratings and market indices. The S&P 500, tracking the performance of the largest U.S. companies, is one of its most recognized indices.

How Does Standard & Poor's Make Money? 

S&P Global generates revenue through fees for its rating services, market intelligence reports, and research subscriptions. It charges fees to issuers for assigning credit ratings and provides valuable insights to investors and market participants.

Conclusion

Standard & Poor's, operating as S&P Global, is a key player in the financial industry, offering essential services for investors, companies, and governments. Its credit ratings and market indices are widely used to assess investment opportunities and market trends.