Bond rating


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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 ?
Delawares proactive fiscal management has been recognized with the announcement of the States triple-A bond ratings and an upgrade of the rating for Delaware Transportation Authority (DTA) bonds.
The senior unsecured bond ratings and senior unsecured shelf ratings have also been downgraded to Ba3 and (P)Ba3 respectively, said the statement from Moodys.
Greek covered bond ratings have demonstrated greater volatility, mirroring movements in the sovereign IDR and Country Ceiling and there remains uncertainty although Fitch expects them to be exempt from any bail-in.
The variable RATING is a composite bond rating calculated using ratings from each of the three major rating agencies.
These represent the four main analytic factors in Moody's Sovereign Bond Rating Methodology.
Before issuing their bond ratings, City Manager Edward M.
Rice University political science professor Bob Stein offered a rundown of what bond rating agencies look for when they give out those ratings.
Moody's reassessment of the sovereign capacity to support the banking system reflects a weakening in the strength of the country's balance sheet, as indicated by the two-notch downgrade of Cyprus's government bond ratings to Baa3 from Baa1 on November 4.
The credit rating agency said it has also "downgraded the government's local currency bond rating to Ba2 with a negative outlook from Baa3," and Jordan's local currency ceilings were downgraded to Baa1 from A3.
Unfortunately, accounting studies that employ bond ratings (as either independent or dependent variable measures) do not address the issue of split bond ratings because such studies do not use more than one bond rating source (e.g., Khurana and Raman, 2003; and, Brandon et al., 2004).
The dependent variable of this study, the bond rating, which serves as a proxy for the agency costs of debt in an inverse manner, depends upon the following variables: amount raised, maturity, coupon rate, and call feature.
Major bond rating companies downgraded the county's bond rating to D which represents a position of Default.