A situation in which two
ratings agencies give a
bond two different
ratings. Experts disagree as to why ratings agencies may give different ratings, but many point to differences in methodology. They also disagree as to whether the higher or the lower rating affects
market prices more. It is important to note, however, that most regulators do not allow
banks and some other
institutional investors to
buy bonds that have not received an
investment-grade rating from at least two agencies. Thus, a split rating in which one agency calls a bond investment-grade and another calls it
junk can have major implications for
issuers and some
investors.