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Nationally Recognized Statistical Rating Organizations (NRSROs)

NRSROs are credit rating agencies that are recognized by the SEC to provide opinions of creditworthiness about issuers of debt and specific debt securities.

Under the Credit Rating Agency Reform Act of 2006, an NRSRO may be registered with respect to up to five classes of credit ratings:

  • (1) Financial institutions, brokers, or dealers
  • (2) Insurance companies
  • (3) Corporate issuers
  • (4) Issuers of asset-backed securities
  • (5) Issuers of government securities, municipal securities, or securities issued by a foreign government.

A credit rating agency is a firm that provides its opinion on the creditworthiness of an entity and the financial obligations (such as, bonds, preferred stock, and commercial paper) issued by an entity. Generally, credit ratings distinguish between investment grade and non-investment grade. For example, a credit rating agency may assign a "triple A" credit rating as its top "investment grade" rating for corporate bonds and a "double B" credit rating or below for "non-investment grade" or "high-yield" corporate bonds.

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