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 ?
Municipal bond rating agencies have begun accounting for public pension funding and have cited pensions in several downgrades, according to research from The Center for Retirement Research at Boston College.
Assist in preparing information for presentations to bond rating agencies and attendance at bond rating agency meetings as needed.
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Weighs in the state's favor with bond rating agencies.
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We want to make sure the concerns of the bond rating agencies are alleviated,'' Martin said.
Default risk can be lessened by diversifying the portfolio and purchasing bonds with higher ratings from bond rating agencies such as Moody's Bond Record.
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