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
for downgrade in line with Ukraine's C1 sovereign ratings.
VAB Bank's debt and deposit ratings were placed on review for downgrade
C-/baa1, which was placed on review for downgrade on 10 April 2012
from Baa1 and placed on review for further downgrade
3) the possibility that Scottish Re's downgrade might affect policyholder lapse or primary insurer contract termination rates, thus, changing cash flow patterns or resulting in adverse selection.
Fitch continues to see stability in the continuing care retirement community (CCRC) sector in 2006, supported by strong demand, high occupancy rates and sound management practices; however, downgrades may outpace upgrades in 2006 due to additional debt issuance to fund large expansion projects.
1:1 for Q105) as credit card (45) and auto loan ABS (19) dominated total upgrades (66) while the problematic franchise loan (35) and aircraft finance (22) arenas took up most of the downgrades (59).