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have protective covenants appropriate to the specific investment. These may include a prohibition of certain activities by
the borrower, maintenance of certain financial measures, and specific conditions impacting the payment of our notes.
Below-Investment-Grade and Split-Rated Securities
We use specific criteria to judge the credit quality of both existing and prospective investments. The ratings
referenced in the tables below are based on the ratings designations provided by the major credit rating agencies
(Moody's, S&P, and Fitch) or, if not rated, are determined based on our internal credit analysis of such securities. When
the ratings issued by the rating agencies differ, we utilize the second lowest rating, regardless of how many of the three
rating agencies actually rated the instrument. Split-rated securities are those where the ratings are not equivalent and one
or more of the ratings is investment grade and one or more is below investment grade. For these split-rated securities, if
there are only two ratings assigned by the credit rating agencies, we take the lower below-investment-grade rating. If
there are three ratings assigned, and two of the three are below investment grade, we consider it a below-investment-
grade security. If there are three ratings and two are investment grade, we consider it an investment grade security unless
our evaluation and assessment shows a below-investment-grade rating is warranted despite two of the three rating
agencies rating it investment grade.
Our portfolio of below-investment-grade securities includes debt securities purchased while the issuer was rated
investment grade plus other loans and bonds purchased as part of an allocation to that segment of the market. The
following is our below-investment-grade exposure in accordance with the above described rating methodology as of
December 31.
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