Lanford: So, when you've got a non-rated bond
the individual customer should look for coverage or what collateral is behind that particular debt relative to the safety of that instrument.
A partially offsetting rating factor is the increased investment risk derived from higher exposure to non-rated bonds
Consequently, bond insurers limit the amount of lower-rated or non-rated bonds
they will underwrite.
As predicted, bond yields are positively related to bond ratings ([b.sub.3] > 0), non-rated bonds have higher average yields ([b.sub.4] > 0), callable bonds have higher average yields ([b.sub.5] > 0), and yields increase with the years-to-maturity ([b.sub.8] > 0).
The higher yield on non-rated bonds is consistent with the results from Model (14) discussed above.
Total risky assets, including listed and unlisted equities, investment funds, below-investment-grade and non-rated bonds
, and investment in associates, increased to about 44.1% of FWD Limited's shareholders' equity on a consolidated basis at end-1H17 (end-2016: 35.3%), below the ratio guidelines for an IFS 'A' rated insurer.
Risky assets, including stocks, property, and non-investment-grade and non-rated bonds
, represented about 69% of adjusted equity, generally in line with Fitch's median ratio for an 'AA' IFS Rating.