= Solution
A <credit rating> is an agency's ordered assessment of an issuer's or particular obligation's capacity and willingness to meet its promised payments. Corporate and sovereign issuers are classified on letter scales, with finer notches, broad investment-grade and speculative-grade groupings, and default categories. Agencies such as Standard & Poor's, Moody's and Fitch also revise ratings as information changes; sovereign assessments involve public finances and institutional or political factors as well as debt-servicing capacity.
A <credit rating> summarizes relative creditworthiness rather than specifying an exact, immutable <credit default> probability. Historical defaults and migrations within rating classes can inform a statistical model. Assuming a homogeneous <Poisson process> within one class is a simplifying choice: it posits a constant event intensity and independent increments, neither of which follows merely from a shared rating. The <credit risk> model must also distinguish default frequency from <loss given default> severity.
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