A reduction of, or negative change in, credit rating of a firm/ a security/ an issue (or a borrower) from a level assigned earlier by a certain credit rating agency. It may also imply the failure of an issuer of debt instruments to maintain minimum credit requirements as defined by the issuance agreement or documentation.

In a corresponding context, credit downgrade means a reduction of the credit rating of any unsecured indebtedness of a firm or any of its subsidiaries (if of a material size within a group) or a negative change in the outlook of such credit rating of the firm or the respective subsidiary (subsidiaries).

Credit downgrade is translated in the form of notch (or a number of notches) reduction on a given scale of credit rating.

Credit downgrade takes place if a credit downgrade trigger (or more) gets activated.