What Is Long-Term Debt?

Long-term debt is a loan or financial obligation that requires interest payments and has a term of more than one year. The concept of long-term debt in Britain, the United States, and France: debt formed by raising funds in the form of bonds or other securities. For states and municipalities, this refers to a debt that, in accordance with special procedures or under future taxation regulations or similar guarantees, allocates funds to pay the principal and interest of a certain expenditure before a certain fiscal revenue has been obtained. For the company's financial management and bankruptcy property management, it refers to new debts arising from borrowings to settle various current debts, unsecured debts, and short-term bill debts and securities debts.

Long-term debt

Long-term debt is often repaid after a long time and interest rates are low. It rarely refers to personal debt. When referring to personal debt, it refers to securities debts of a permanent nature or pecuniary debts secured by a certain amount of property.

Moody's long-term debt rating is an opinion on the relative credit risk of fixed income debt, and the original maturity of these debts must be one year or more. These ratings are about the possibility that a certain financial debt cannot be fulfilled as promised, and reflect the probability of default and any financial losses incurred at the time of default.

Moody's long-term rating rating implications

Level meaning

Aaa Aaa debt has the highest credit quality and the lowest credit risk.

Aa Aa grade debt has a high credit quality with very low credit risk.

AA debt is medium to upper grade and has low credit risk.

Baa Baa debt has medium credit risk. These debts are moderately rated and therefore have some speculative characteristics.

Ba Ba debt is speculative and has high credit risk.

BB debt is speculative debt with high credit risk.

Caa Caa debt has a poor credit profile and high credit risk.

Ca Ca-grade debt is highly speculative and may or may be in default, with little hope of recovering principal and interest.

CC-grade debt is the lowest bond grade, and is usually in default, with little chance of recovering principal and interest.

Note: The revised numbers 1, 2 and 3 can be used for ratings from Aa to Caa. The revised number 1 indicates that the debt ranks higher in the same class rating; the revised number 2 indicates that the debt ranks in the middle; the revised number 3 indicates that the debt ranks lower in the corresponding class rating.