Negative Watch

DEFINITION of 'Negative Watch'

A status that the credit-rating agencies (Standard and Poor's, Moody's and Fitch) give a company while they are deciding whether to lower that company's credit rating. Once a company has been placed on negative watch, it has a 50% chance of its rating being lowered in the next three months.

BREAKING DOWN 'Negative Watch'

When a company's credit rating is downgraded, it is considered likely to underperform compared to its peers. Having its credit rating downgraded is a big blow for a business because it will have to pay a higher rate of interest to convince investors to lend it money, if it can convince them at all. Entire countries can also be placed on negative watch.