Ratings apply to issuers of fixed income securities and to the securities issues themselves.
For fixed income issues, a credit rating is a forward-looking evaluation of the probability of default and severity of loss expressed in a standard measure. Ratings apply to bank loans, commercial paper, medium-term notes, bonds and preferred stock, but they are not used for common stock. By convention, an issuer rating is equal to a senior unsecured debt rating whether the company has any such debt outstanding or not. In effect, issuer ratings deal with default probability only. Ratings use standard scales to rank risk.