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.

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California Governor Gavin Newsom, according to CALmatters, said today, "The bond-rating agencies have marked the 12th and 13th as important days.
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Reform of the bond-rating agencies has been discussed in previous issues of Regulation.
The manual includes a glossary, and an appendix provides information on general requirements of bond-rating agencies.
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* May be inaccessible if bond-rating agencies threaten to lower the state's bond rating if the fund is touched.