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 ?
Summary: Investors see big banks as riskier than before the first flames of the financial crisis flared five years ago and probably always will, according to a new report from Moody's Analytics, a sister company of the bond-rating agency.
I thought Family Restaurants had enough on its plate turning around its own restaurants,'' said Mike Rowan, a senior analyst at Moody's, a New York bond-rating agency.
In June, Orange County also filed five suits against various former advisers as well as Standard & Poor's bond-rating agency and the Student Loan Marketing Association (Sallie Mae).
Neil Baron and James Nadler, who oversaw the development of Fitch Investor's Service into a major bond-rating agency, founded the firm in November 2002.
The cases are a $2 billion suit against Merrill Lynch, which sold the county treasury most of the risky securities that contributed to its downfall; a $3 billion action against KPMG Peat Marwick, the county's outside auditor; and $500 million suits against the Standard & Poor's bond-rating agency, Student Loan Marketing Association, and broker Rauscher Pierce Refsnes Inc.
The firm was founded in November 2002 by Neil Baron and James Nadler, who oversaw the development of Fitch Investor's Service into a major bond-rating agency.
Fitch, an international bond-rating agency, earlier this month assigned ratings of AA-/F1+ to the new bond series.