Bond rating

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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 premier bond rating reflects many years of prudent fiscal management and recent efforts to limit operating budget growth, boost reserves during good times, and steer one-time revenues to one-time projects.
The decision to narrow the gap between the ceilings and the government bond rating is informed by Moody's view of weakening institutional strength.-TradeArabia News Service
Fitch Ratings says there has been a sharp turnaround in covered bond rating Outlooks in 2015.
Studies also have looked at political aspects of state administration to explain bond ratings. Jimenez (2011) finds that states with management systems that reduce bureaucratic waste, or adopt management structures that are more efficient and transparent are more likely to experience improved bond ratings.
-- 27 October 2011 : Moody's downgrades Egypt's government bond ratings by one notch to B1 from Ba3.
Before issuing their bond ratings, City Manager Edward M.
Ba1 from B2 with a negative outlook, and is now at the same level as the Slovenian government bond rating. This reflects the Republic of Slovenia's unconditional and irrevocable guarantee of the 'due and punctual payment' of all sums due and payable as contractually required under the conditions of this government-guaranteed debt instrument.
Using a sample of 797 corporate bonds issued between 1971 and 1978 and rated by both S&P and Moody's, the authors find that, between 1971 and June 1974, when Moody's charged issuers for bond ratings and S&P charged investors, Moody's ratings were higher on average than S&P's ratings for the same bond.
These actions follow Moody's downgrade on November 4 of the Cypriot government bond rating by two notches to Baa3 (on review for possible further downgrade) from Baa1.
17 October 2011 - Fitch on Friday downgraded the rating on the mortgage-backed bonds issued by Portuguese bank Santander Totta to AA- from AA with "negative" outlook and maintained the A+ covered bond rating of Banco Popular Portugal on "negative" watch.
According to the bill analysis, only charter schools that show "both academic and financial integrity" would be able to use the state's bond rating.
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).