Rating service

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Rating Service

A company that evaluates preferred stocks and debt securities based on the likelihood of default. The ratings service provides an objective rating to the security; the rating is higher when the likelihood of default is lower. There are three main ratings services: Moody's, Fitch, and Standard & Poor's. Companies issuing new preferred stocks or debt securities pay one or more of the ratings services to have their securities rated. Banks are not allowed to invest in securities with ratings below a certain level. See also: Investment-grade, Junk.

Rating service.

A rating service, such as A.M. Best, Moody's Investors Service, or Standard & Poor's, evaluates bond issuers to determine the level of risk they pose to would-be investors.

Though each rating service focuses on somewhat different criteria in making its evaluation, the assessments tend to agree on which investments pose the least default risk and which pose the most.

These rating services also evaluate insurance companies, including those offering fixed annuities and life insurance, in terms of how likely a provider is to meet its financial obligations to policyholders.

References in periodicals archive ?
He said all three bond-rating agencies pointed to the city's robust revitalization progress and diverse tax base.
Reform of the bond-rating agencies has been discussed in previous issues of Regulation.
The manual includes a glossary, and an appendix provides information on general requirements of bond-rating agencies.
If nothing is done and the government just takes the position that this is an accounting issue, bond-rating agencies may not agree with this position and view this as an inherent problem.
May be inaccessible if bond-rating agencies threaten to lower the state's bond rating if the fund is touched.
In his letter to the City Council, Comrie warned that the city's bond-rating agencies are likely to downgrade Los Angeles' credit rating if debt payments exceed 10 percent of revenue.
He said the bond-rating agencies cited the transfer of the former city-owned Worcester Regional Airport to the Massachusetts Port Authority, the commencement of demolition and construction work for the $563 million CitySquare redevelopment project, and progress the city has made toward building its reserve levels as key factors to their decisions.
S&P, one of the three major bond-rating agencies, left unchanged its relatively low evaluations of the county's outstanding debt.