Coming in 2017: A Wall Street-aligned Rating Scale

By Paige Chapel, President & CEO, Aeris

In June, we introduced the concept of “Aeris 3.0″—a strategic set of changes coming to Aeris over the next 6-12 months. The Aeris 3.0 initiative is designed to provide even greater value to our clients—both investors and CDFIs—and build on our progress toward opening up CDFIs to new groups of investors.

In 2014, Aeris 2.0 came to life when we enhanced our rating and due diligence work with the introduction of standardized CDFI financial performance data and analytics via our online platform, the Aeris Cloud. Dozens of investors are now using our data tools in their investment underwriting and monitoring.

In 2017, Aeris 3.0 will move CDFIs closer to the capital markets with the introduction of a new rating scale, a streamlined rating process to support annual re-ratings of CDFIs, an enhanced Aeris Rating Report, and the introduction of standardized impact metric definitions—aligned with the GIIN’s widely-accepted IRIS metric catalogue. These enhancements to our products reflect the most-frequently requested changes that Aeris receives from our investor clients.

Today, I am pleased to share one of the first and most visible changes associated with Aeris 3.0, our new rating scale, launching in 2017.

As of January 1, 2017, Aeris will be shifting to a rating scale that more closely resembles those of Wall Street rating agencies. For financial strength and performance ratings, Aeris will convert the present 1-5 scale to a AAA-B scale, including plusses and minuses.

The new rating scale is more intuitive and familiar to a larger universe of investors. Aeris has mapped all existing ratings to the new scale, and the resulting distribution provides excellent continuity and integrity. All Aeris-rated CDFIs have now been told what their current rating will translate to when the switchover occurs on January 1. (Please contact us if you are a CDFI that needs your translated rating to be re-sent to you.) Beginning in December, CDFIs will be able to access new “Aeris-rated” logos and rating certificates via the Aeris Cloud portal.

Aeris will also convert CDFIs’ impact ratings to the new impact rating scale, which will range from four stars (strongest) to one star (weakest). CDFIs will be able to maintain their rating by reporting program/product updates and impact data to Aeris, and will not require annual re-ratings. When Aeris does issue a new impact rating, we will produce a standalone Impact Rating Report to help CDFIs demonstrate commitment and accountability through a neutral third party’s assessment of their impact intentionality.

Below is the translation from the current rating scale to the new scale that will launch on January 1.

Impact Rating Scale

Pre-2017 As of January 1, 2017
AAA Four stars
AA Three stars
A Two stars
B One star

Financial Strength and Performance Rating Scale

Pre-2017 As of January 1, 2017
1 AAA
2 AA+
AA
AA-
A+
3 A
A-
BBB+
BBB
BBB-
4 BB+
BB
BB-
5 B

We are deeply grateful for the vision and guidance of our advisory committee of CDFIs (see list below) who generously donated their time to help shape the development of this new rating scale, as well as the invaluable feedback that we received from our investor clients this spring.

If you are an investor or CDFI that wishes to learn more or provide feedback on this change, please do not hesitate to contact me or the Aeris team at info@aerisinsight.com.

CDFI Advisory Committee on Aeris Ratings (2016)

  • Janie Barrera, Chief Executive Officer, LiftFund
  • Joshua Brackett, Chief Financial Officer, Access to Capital for Entrepreneurs, Inc.
  • Jess Brooks, SVP Development and Communication, Boston Community Capital
  • Mike Crist, Chief Financial Officer, Reinvestment Fund
  • Dave Glaser, Chief Executive Officer, Montana CDC
  • Calvin Holmes, President, Chicago Community Loan Fund
  • Trinita Logue, retired President and founder, IFF
  • Fran Lutz, Interim Chief Executive Officer, Opportunity Finance Network
  • Ana Thompson, Chief Financial Officer, Opportunity Fund