split rating

Split rating

Two different ratings given to the same security by two important rating agencies.

Split Rating

A situation in which two ratings agencies give a bond two different ratings. Experts disagree as to why ratings agencies may give different ratings, but many point to differences in methodology. They also disagree as to whether the higher or the lower rating affects market prices more. It is important to note, however, that most regulators do not allow banks and some other institutional investors to buy bonds that have not received an investment-grade rating from at least two agencies. Thus, a split rating in which one agency calls a bond investment-grade and another calls it junk can have major implications for issuers and some investors.

split rating

A condition that occurs when the same bond is rated differently by the rating agencies. An example is a bond rated AA by one agency and A by another agency. A split rating may occur because one rating agency places a different emphasis on certain variables or because it views a particular item (such as a recent acquisition by the issuer) differently than the other rating agency.
References in periodicals archive ?
She has a split rating but her turf figure still looks too high on what she's done, being only 3lb lower than her all-weather one.
We see that the split rating dummy is similar in magnitude and has the opposite sign from the seniority variable.
In a few instances, an issuer will go with the lower credit-support level and receive a split rating.
The split rating reflects the bonds' short-term remarketing feature.
3) Thus, in examining the yields on split rated bonds, this paper tests the joint hypotheses that: 1) a split rating is a signal of information opacity, and 2) information opacity is priced by bond investors.
The company has operated with a split rating in the past with nominal impact on borrowing capacity and cost," said Roy A.
Most publicly issued corporate and municipal bonds are rated by two rating agencies: Moody's and S&E However, the two rating agencies do not always agree on the ratings for a particular issue, resulting in a split rating.
The split rating reflects the short-term credit rating of Deutsche Morgan Grenfell since its unit Deutsche Bank AG, London Branch has the obligation to purchase all capital trust securities validly tendered on or prior to June 2000.
However, in about 15% of cases, these two raters disagree on the letter rating--a so-called split rating.
These new criteria have increased issuers' split ratings (when the agencies assign different ratings to the same issuer).