Bond credit rating

 · Bond Ratings and the Rating Process Rebecca Moses, Associate Director California Debt and Investment Advisory Commission Fundamentals of Debt Financing October 3, Bond Rating Overview > A rating is: – An indication of credit quality – obligations on a timely basis An assessment of the issuer’s willingness and ability to meet its debt – Based on qualitative and .

Following an analysis of the information obtained on the rated entity, the primary analyst prepares a Credit Rating Report in a manner consistent with the relevant CI methodology and format. The focus is usually on the intrinsic financial strength and financial resilience of the rated entity, but external support factors are also taken into consideration.

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Last month, Moody's published a Special Comment (The Bond Rating Process in a Changing Envi-ronment) which discussed a number of initiatives intended to enhance the quality and timeliness of our.

The investor is not left to investigate and arrive at a bond rating with no outside assistance. There are a number of competent ratings service organizations that routinely provide a breakdown of relevant factors that can impact the bond rating process. After evaluating each factor that is involved in arriving at the bond rating, the service generally uses a simple grading system to provide a simple final score on the viability of in vesting in the bond issue.

Most services use a grading system that ranges from AAA as an indicator of the highest rating possible, to a score of D, which represents the least desirable of bond issues. Researching the bond rating is always an excellent decision for the potential investor.

While it is important to make note of the ratings issued by several different services, it is usually a good idea to dig a little deeper and consider the individual factors that led to the bond rating assigned by a particular rating service. Investigating several different sources for the bond rating will help the investor to make a more informed decision about whether to purchase the bond, or look for a different investment opportunity. Thank you Post your comments Post Anonymously Please enter the code: One of our editors will review your suggestion and make changes if warranted.

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Watch the Did-You-Know slideshow. Malcolm Tatum Edited By: Bronwyn Harris Last Modified Date: This Day in History. The first US presidential election was held. You might also Like. A potential misuse of historic default statistics is to assume that historical average default rates represent the " probability of default " of debt in a particular rating category. From Wikipedia, the free encyclopedia. Council on Foreign Relations. Retrieved 29 May Archived from the original PDF on Social Science Research Network.

Accessed 27 August Retrieved from " https: Bond market Investment Credit rating. Views Read Edit View history. This page was last edited on 4 January , at By using this site, you agree to the Terms of Use and Privacy Policy. It differs from the highest-rated obligors only to a small degree. An obligor has STRONG capacity to meet its financial commitments but is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligors in higher-rated categories.

However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitments.

However, it faces major ongoing uncertainties and exposure to adverse business, financial, or economic conditions which could lead to the obligor's inadequate capacity to meet its financial commitments.

Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitments. May be used where a bankruptcy petition has been filed. An obligor has failed to pay one or more of its financial obligations rated or unrated when it became due. Preliminary ratings may be assigned to obligations pending receipt of final documentation and legal opinions. The final rating may differ from the preliminary rating. Rating withdrawn for reasons including: