Bond rating


Also found in: Dictionary, Thesaurus, Wikipedia.
Related to Bond rating: Bond Rating Agencies

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 ?
1 million in general obligation municipal bonds, Standard & Poor's bumped up Worcester's bond rating by two grades, from A- to A+ while Moody's Investors Service upgraded its rating from A1 to Aa3.
While we believe that both of these studies contribute to the accounting literature, we also believe that the use of only one bond rating source represents a limitation in both studies because the use of only one bond rating source masks the potential influence, if any, of split ratings on the results of these studies.
While the risk of a government default is very low, as reflected in its A2 bond rating, the resiliency of private sector ratings, especially those higher than the government, to the stress associated with government financial difficulties must be thoroughly assessed.
As a result, he added, that has changed how bond rating agencies assess communities.
Twenty-three Massachusetts cities and towns currently have the highest possible bond rating - AAA - from at least one of the three major rating agencies, according to the Massachusetts Municipal Association.
At the same time, Fitch Ratings issued a less pessimistic outlook, affirming its previous bond rating for the city.