Bond rating

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Bond rating

A rating based on the possibility of default by a bond issuer. The ratings range from AAA (highly unlikely to default) to D (in default). See: Rating, investment grade.

Bond Rating

A measure of the likelihood of a bond's default. Credit ratings agencies conduct credit analysis in order to provide bond ratings; the criteria and the ratings themselves may change these from time to time. Bond ratings are important to bond investors as they make investment decisions. For example, if a bond has a low rating and an investor is risk averse, he/she will be unlikely to invest in that bond, as it will lead to an increased possibility that the investor will lose the amount invested. See also: Investment-grade, Junk.

bond rating

The grading of a debt security with respect to the issuer's ability to meet interest and principal requirements in a timely manner. The three major rating services—Fitch, Moody's, and Standard & Poor's—use AAA as their highest rating and grade down through Bs and Cs. (D is used only by Fitch.) Debts rated AAA, AA, A, and BBB are considered investment-grade. Higher rated bonds provide lower returns, the price an investor pays for greater safety. Compare stock rating. See also interest coverage.

Bond rating.

Independent agencies, such as Standard & Poor's (S&P) and Moody's Investors Service, assess the likelihood that bond issuers are likely to default on their loans or interest payments.

Ratings systems differ from one agency to another but usually have at least 10 categories, ranging from a high of AAA (or Aaa) to a low of D. Bonds ranked BBB (or Baa) or higher are considered investment-grade bonds.

References in periodicals archive ?
In addition to rate levels, generation costs and competitive issues, the PSC has also directed the parties to address maintenance of the company's investment-grade bond credit rating and the burdens of social programs and other social costs presently included in rates.
One of the biggest impacts to Arizona is the possible negative effect on bond credit ratings," said Donaldson.
The upgrade of PSE's corporate credit rating to 'BBB' by Standard & Poor's, immediately after we announced the merger closing date, also improved the bond credit ratings and enabled an attractive interest rate on the debt.
At the same time, Fitch has affirmed TEP's 'BB+' first- and second-mortgage bond credit ratings and has assigned a 'BB+' rating to the utility's new $401 million credit facility, which is secured by second-mortgage bonds.
Jason Todd of Fitch IBCA stated: "Fitch views Zurich's political risk coverage as sufficient to substantially mitigate sovereign-related risks that would normally limit bond credit ratings to that of El Salvador's foreign currency rating.