Definition of rating review

A rating review, also known as rating watch, watch list or Credit Watch, indicates a future rating change.

It represents a credit rating agency's opinion on the development of a credit rating over the next three months. Rating reviews give a stronger indication of future rate changes than credit outlooks.

Typically, review listings are invoked by major corporate events, such as the announcement of a merger or acquisition, or the change of a corporation's strategy.

During the review listing, the agency usually interacts with the company and collects additional information. The watchlist is eventually resolved by the announcement of a rating change or a rating confirmation. The rating review seems to be an effective instrument to urge borrowers with weak credit quality to abstain from further risk shifting.

A rating review is announced solely at the discretion of the credit rating agency. 

A given rating maybe reviewed by the agency but not announced publicly as some reviews could be just routine.

Credit rating agencies aim to conclude listed reviews within 90 days, which gives time to clarify the impact of an announcement.


While the stock market reacts strongly negative to direct rating downgrades (a median loss of 9.4% following Moody’s rating downgrades over the period 1991 to 2004), the reaction to watchlist-preceded downgrades is much weaker (-1.7%). This confirms the monitoring role of credit rating agencies over and above their general role as information providers. [1]