Standard & Poor’s (S&P) — Overview
Standard & Poor’s, now operating as S&P Global, is a major provider of financial market intelligence: indexes, credit ratings, research, and data used widely by investors, issuers, and regulators.
What S&P Global does
- Maintains widely followed market indexes (most notably the S&P 500) used as benchmarks for funds and investment products.
- Publishes independent credit ratings that assess the creditworthiness of corporations, governments, and debt instruments.
- Produces market intelligence, analytics, and sector research across asset classes and geographies.
Major business divisions include S&P Global Ratings, S&P Dow Jones Indices, S&P Global Market Intelligence, and S&P Global Platts.
Brief history
- Originated from two publishers: Poor’s (19th century railroad guides) and the Standard Statistics Bureau (founded 1906).
- The firms merged in 1941 to form Standard & Poor’s.
- Later became part of the McGraw‑Hill group and rebranded as S&P Global in 2016.
Key products and services
Indexes
- S&P 500: Tracks 500 of the largest U.S. publicly traded companies and serves as a primary barometer of the U.S. equity market. Many ETFs and mutual funds use it as a benchmark.
- Other indices: S&P SmallCap 600, S&P MidCap 400, S&P Composite 1500, and many sector- and strategy-specific indices.
- Index rules require candidates to meet market-cap, liquidity, and public float thresholds (e.g., minimum market cap and minimum public float percentage).
Credit ratings
- Ratings express the issuer’s or debt’s creditworthiness on a scale from AAA (highest) to D (default). Plus/minus modifiers and numbers are used for nuance.
- Investment grade: BBB (or Baa3 for Moody’s equivalent) and above. Ratings below BBB are considered speculative/junk.
- Ratings cover long-term and short-term debt and often include outlooks for future credit direction.
S&P Underlying Ratings (SPURs)
- SPURs are separate opinions on a municipal or public-sector obligation’s credit quality excluding the effect of third-party guarantors or insurance.
- Issued at the request of the issuer and monitored while published.
S&P 500 futures
- CME launched S&P 500 futures in 1982.
- E-mini S&P 500 (1997) decreased contract size and traded electronically, increasing accessibility and liquidity.
- Micro E-mini (2019) further reduced size to lower the capital barrier.
- Futures require margin (a fraction of contract value) rather than full contract settlement, which is different from stock margin mechanics.
How S&P makes money
- Fees from issuers for credit rating services.
- Licensing and subscription revenue from indexes, data, analytics, and research products.
- Consulting and market intelligence services.
Finding an S&P rating
- Corporate and sovereign ratings are published by S&P Global Ratings. Many ratings and credit reports are accessible on S&P Global’s website (some content may require registration or subscription).
Who are S&P’s competitors?
- For credit ratings: Moody’s and Fitch.
- For market data and indices: other index providers and financial-data firms (e.g., Bloomberg for certain services).
Key takeaways
- S&P Global is a leading index provider and one of the major global credit rating agencies.
- The S&P 500 is its most recognizable product and a primary benchmark for U.S. equities.
- S&P ratings (AAA to D) are widely used to gauge credit risk; BBB and above are considered investment grade.
- S&P’s products influence markets through benchmarks, rating assessments, and data-driven research.