Bond Rating and Risk
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Please note that some links given on the original posting were not working properly. I have provided alternate links. ( when you go to Moody's web site-please choose about Moody's on its Menu).
The corporations that issue bonds to the investing public commonly get the bonds rated by one or more of the independent rating companies. In order for corporations to sell debt securities, the investing public must be able to obtain an independent assessment of the risks associated with corporate bonds. Investors depend on the rating agencies to assess risk and returns on bonds in various risk categories and then assign ratings
There are three major rating agencies for debt securities of domestic firms: Standard and Poor’s, Moody’s and Fitch. Each of the rating services has web pages describing rating process
Answer the following questions
1. Describe the ratings process.
2. What are investment grade bonds?
3. Identify the key ratios that might go into assignment of ratings of bonds?