• S&P Global (formerly Standard & Poor’s) is a major provider of financial market benchmarks (notably the S&P 500) and issuer of credit ratings used around the world.
– Its businesses include index licensing (S&P Dow Jones Indices), credit ratings (S&P Global Ratings), market data and analytics, and commodity/energy intelligence (Platts).
– S&P ratings (AAA to D, with modifiers) express creditworthiness; BBB and above is considered “investment grade.”
– Investors use S&P indexes as benchmarks, invest via index funds/ETFs, and use S&P credit opinions to assess debt risk. Practical, step-by-step checks can help you find a company’s S&P rating or determine index membership.
What is S&P Global?
S&P Global is a U.S.-based, publicly traded financial information company best known for:
– Producing equity and sector indexes (most famously the S&P 500) that serve as benchmarks for funds and market performance.
– Issuing credit ratings and research on governments, corporations, financial instruments, and municipal debt.
– Providing market intelligence, analytics, and commodity price reporting.
Short history (high level)
– Roots in 1860s–1900s through Poor’s Publishing and The Standard Statistics Bureau.
– The two firms merged in 1941 to form Standard & Poor’s.
– McGraw-Hill acquired S&P in 1966; in 2016 McGraw Hill Financial rebranded as S&P Global.
– S&P 500 index launched in 1957; S&P later consolidated index operations with Dow Jones under S&P Dow Jones Indices.
Major S&P Global divisions
– S&P Global Ratings: credit ratings, research, and surveillance.
– S&P Dow Jones Indices: index design, calculation, and licensing (S&P 500, small-, mid-cap indexes, etc.).
– S&P Global Market Intelligence: company-level data and analytics.
– S&P Global Platts: energy and commodities price reporting.
S&P indexes — what they measure and why they matter
– S&P 500: tracks the performance of 500 large U.S. publicly traded companies selected by committee based on size, liquidity, sector representation and other criteria. It’s widely used as a gauge of U.S. large-cap equities and as a benchmark for many mutual funds and ETFs.
– Other indexes: S&P SmallCap 600, S&P MidCap 400, S&P Composite 1500, and numerous sector, thematic and country indexes.
Why investors use them:
– Passive investing: index funds and ETFs replicate these indexes.
– Benchmarking: compare active managers to a standard.
– Market signals: index moves are broadly followed as indicators of market health.
S&P 500 futures — basics and practical uses
– Futures let traders gain exposure to the S&P 500 index via contracts rather than buying the underlying stocks.
– Contract sizes evolved: original contract (delisted 2021) had a $250 multiplier; E-mini introduced in 1997 ($50 multiplier); micro E-mini introduced in 2019 ($5 multiplier).
– Uses: hedging portfolios, speculating on index direction, intraday liquidity and price discovery.
– Key point: futures require margin (a fraction of notional value), which differs from margin borrowing on stocks.
S&P credit ratings — how they work
– Purpose: quantify credit risk — the likelihood an issuer will meet principal and interest obligations.
– Long-term scale (typical): AAA (highest quality) → AA → A → BBB → BB → B → CCC → CC → C → D (default). Pluses/minuses or numeric modifiers sometimes refine the grade.
– Investment grade vs. speculative: BBB− (or Baa3 at Moody’s) and higher = investment grade; BB+ and below = non‑investment grade (speculative/junk).
– Short-term ratings: a separate scale for instruments maturing in ≤1 year (e.g., A-1+, A-1, A-2, etc.).
S&P Underlying Ratings (SPURs)
– Purpose: evaluate a municipality’s or issuer’s credit quality excluding guarantees, insurance or other credit enhancements that accompany a specific bond issue.
– SPURs are issued at the request of the issuer and are publicly monitored.
– Helpful for investors who want to look through enhancements and see the issuer’s core credit strength.
Example: reading a rating
– S&P assigns a long-term issuer credit rating (e.g., “A”) to a company. A higher-grade rating implies lower perceived default risk.
– S&P may also issue issue-specific ratings (e.g., for a particular bond) and outlooks (positive, stable, negative) indicating possible direction over the next 6–24 months.
How does S&P Global make money?
Primary revenue sources:
– Fees for credit-rating services (issuers typically pay for ratings and surveillance).
– Index licensing: asset managers and ETF sponsors pay licensing and data fees to track S&P indexes.
– Subscriptions to market data, analytics and research.
– Commodity price reporting and industry-specific intelligence (Platts).
Note on conflicts of interest: because many ratings are paid by issuers, investor due diligence and regulatory oversight exist; nevertheless, the issuer-pay model is commonly discussed in debates about ratings’ incentives.
Which companies are in the S&P 500?
– The S&P 500 comprises 500 large U.S. public companies selected by an S&P committee based on market capitalization, liquidity, public float (usually at least 10% of shares outstanding publicly available), corporate structure, and sector representation.
– Examples of typical constituents: Microsoft, Apple, Amazon, Alphabet, ExxonMobil, Coca-Cola, JPMorgan Chase.
– Constituents change through reconstitutions and corporate events (mergers, delistings, bankruptcies).
Practical steps — how to find if a company is in the S&P 500
1. Visit the S&P Dow Jones Indices website and search for “S&P 500 constituents” — they publish the current list and history.
2. Use major financial portals (Bloomberg, Yahoo Finance, Google Finance) and search the company; the profile often lists index memberships.
3. Check ETF holdings (e.g., SPY, IVV, VOO) — those tracking the S&P 500 publish daily holdings that effectively mirror the index membership.
Practical steps — how to find a company’s S&P credit rating
1. Go to S&P Global Ratings’ website and use the search box for the issuer name or ticker — many ratings and reports are publicly available.
2. Check the issuer’s investor relations site — ratings are often cited in bond prospectuses and investor presentations.
3. Use bond data platforms (Bloomberg, Refinitiv, Market Intelligence) or municipal bond portals — these list ratings for specific instruments.
4. For municipal bonds, look up the offering documents (OS or EMMA for U.S. munis) which list credit enhancements, SPURs (if applicable), and ratings.
5. If you can’t find a public rating, contact the issuer’s investor relations or the bond trustee — ratings are only assigned at the issuer’s request in some cases.
Is BBB investment grade?
– Yes. Under S&P’s scale, BBB (specifically BBB− and higher) is the lowest rung considered investment grade. Ratings below this (BB+ and lower) are speculative (non‑investment grade or “junk”).
– Practical implication: many institutional investors and pension funds have mandates to hold only investment-grade debt, so moving below BBB can materially affect demand and borrowing costs.
Practical investor steps: how to use S&P information in decisions
1. For equity exposure:
• Use S&P indexes to benchmark performance or to invest passively via low-cost ETFs (match index ticker to fund).
• Confirm index methodology and reconstitution rules if you care about sector weights or eligibility criteria.
2. For fixed-income:
• Compare S&P issuer and issue ratings with other agencies (Moody’s, Fitch) — look for consensus and differences.
• Use outlooks and watchlists as early warning signals but combine with fundamental credit analysis (cash flow, leverage, liquidity).
3. For portfolio risk management:
• If you hold bonds, monitor rating changes and listen for downgrades: they can increase borrowing costs and reduce market value.
• For municipal issues, check for SPURs to see issuer-level credit separate from enhancements.
4. For derivatives/futures:
• Use futures for hedging or tactical exposure, but understand margin rules, contract multipliers (e.g., micro E-mini = $5 × index), and settlement mechanics.
5. For due diligence:
• Don’t rely solely on ratings; read S&P’s rationale reports and cross-check financial statements, sector trends, and macro factors.
Limitations and criticisms to keep in mind
– Ratings are opinions, not guarantees. They are backward- and forward-looking but can miss new, fast-moving risks.
– The issuer-pay model has been criticized for potential conflicts of interest; use ratings as a starting point, not the sole input.
– Indexes measure past and current market composition but are not forecasts of future returns.
The bottom line
S&P Global is a central provider of market indexes and credit ratings used throughout finance. Its S&P 500 index is a primary equity benchmark, and its credit ratings (AAA to D) inform bond markets and risk assessment. Investors should use S&P products and ratings as important inputs—alongside direct financial analysis, diversification, and their investment objectives—not as the only determinant of action.
Selected sources and further reading
– S&P Global corporate site and S&P Global Ratings (www.spglobal.com)
– S&P Dow Jones Indices (www.spglobal.com/spdji)
– CME Group (information on S&P 500 futures and E‑mini contracts) (www.cmegroup.com)
– Investopedia, “S&P Global” (background and explanation)
Editor’s note: The following topics are reserved for upcoming updates and will be expanded with detailed examples and datasets.