Foreign Currency Credit Rating & Local Currency Credit Rating

S&P Global Ratings' issuer credit ratings make a distinction between foreign currency ratings and local currency ratings. A Foreign Currency Credit Rating on an issuer will differ from the local currency rating on it when the obligor has a different capacity to meet its obligations denominated in its local currency, vs. obligations denominated in a foreign currency.  

 It may take the form of either an issuer or issue credit rating. Foreign Currency Credit Ratings are typically only provided on S&P Global Ratings' global scale, but are also provided on a national scale basis in highly dollarized economies. 

For both Local Currency Credit Ratings and Foreign Currency Credit Ratings, the opinion on S&P Global Ratings' global scale is based on the obligor's individual credit characteristics, including the influence of country or economic risk factors.

Local and Foreign Currency Credit Ratings differ in that a Foreign Currency Credit Rating includes transfer and other risks related to sovereign actions that may directly affect access to the foreign exchange needed for timely servicing of the rated obligation. Transfer and other direct sovereign risks addressed in such ratings include the likelihood of foreign exchange controls and the imposition of other restrictions on the repayment of foreign debt. 

In the case of national scale ratings the foreign currency credit opinions are identical to local currency ratings, reflecting the national scale's exclusion of foreign currency issue.