Downgrade


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Downgrade

A negative change in ratings for a stock, or other rated security.

Downgrade

A change in the rating of a bond or other security in a downward direction. For example, a bond that had previously been rated AAA may be downgraded to AA. Downgrades are considered detrimental because they mean the ratings agency believes that the issuer of the security is less likely to be able to fulfill its obligations, such as coupon payments. A downgrade increases the cost of funds for the issuer because investors expect a higher return in exchange for the increased risk on the security. See also: Upgrade.
References in periodicals archive ?
global-scale ratings and NSR were placed on review for downgrade
to Ba2 (hyb) from Baa3 and placed on review for further downgrade
The largest downgrade on a par basis was Philadelphia School District's $2.