Downgrade

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Downgrade

A negative change in ratings for a stock, or other rated security.

Downgrade

A change in the rating of a bond or other security in a downward direction. For example, a bond that had previously been rated AAA may be downgraded to AA. Downgrades are considered detrimental because they mean the ratings agency believes that the issuer of the security is less likely to be able to fulfill its obligations, such as coupon payments. A downgrade increases the cost of funds for the issuer because investors expect a higher return in exchange for the increased risk on the security. See also: Upgrade.
References in periodicals archive ?
Of the 18 downgrades in the last quarter of 2006, representing $5.
The affirmations follow an analysis by Fitch of the potential effects, on the Ballantyne Re notes, of the recent downgrade of Scottish Re (U.
The eight downgrades and 12 upgrades that occurred in the acute care sector resulted in a downgrade-to-upgrade ratio of 0.
The amount of upgrades almost tripled (1,203) during this past quarter compared to 1Q'05 (421), while the ratio of upgrades to downgrades also dramatically improved (4.