Telus 2006 Annual Report Download - page 34

Institution Rating Outlook
to give an indication of the risk that a
borrower will not fulfill its near-term debt
obligations in a timely manner. The ratings
range from R-1 (high) to D. Short-term debt
rated R-1 (low) is of satisfactory credit
quality. The overall strength and outlook for
key liquidity, debt, and profitability ratios is
not normally as favourable as with higher
rating categories, but these considerations
are still respectable. Any qualifying negative
factors that exist are considered
manageable, and the entity is normally of
sufficient size to have some influence in its
industry.
S&P An obligation rated ‘BBB’ exhibits adequate
protection parameters. However, adverse
economic conditions or changing
circumstances are more likely to lead to a
weakened capacity of the obligor to meet its
financial commitment on the obligation.
The ratings from ‘AA’ to ‘CCC’ may be
modified by the addition of a plus or minus
sign to show relative standing within the
major rating categories.
Rating outlooks assess the potential
direction of a rating, typically over a six-
month to two-year period. An outlook does
not necessarily precede a rating change or
CreditWatch placement. Outlooks may be
positive, negative, stable, or developing and
they accompany all long-term credit ratings
except those on CreditWatch.
Moody’s Issuers rated “Baa” are subject to moderate
credit risk. They are considered medium-
grade and as such may possess certain
speculative characteristics.
Moody's appends numerical modifiers 1, 2,
and 3 to each generic rating classification
from ‘Aa’ through ‘Caa’. The modifier 1
indicates that the obligation ranks in the
higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking;
and the modifier 3 indicates a ranking in the
lower end of that generic rating category.
“Under Review for Upgrade” A Ratings
Under Review designation indicates that the
issuer has one or more ratings under review
for possible change, and thus overrides the
outlook designation
Moody's also provides a rating outlook
which is an opinion regarding the likely
direction of a rating over the medium term.
Where assigned, rating outlooks fall into the
following four categories: Positive (POS),
Negative (NEG), Stable (STA), and
Developing (DEV -- contingent upon an
event.
See also “Material Contracts” on page 40 of this annual information form for more information.
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