bond rating

Học thuật
Thân thiện
bond rating

A financial analyst reviews a bond rating report on her computer screen.

Definition

Noun: An assessment, typically issued by a specialized credit rating agency, of the creditworthiness of a corporation or government entity issuing a bond. It represents an opinion on the relative risk that the bond issuer will default on its financial obligations. Ratings are expressed as letter grades, with higher grades indicating lower perceived risk.

Usage

A bond rating is a crucial tool for investors to evaluate the risk associated with a debt instrument before purchasing it. It is assigned by independent agencies after analyzing the issuer's financial health and economic prospects.

Examples
  • The company's bond rating was downgraded from AA to BBB, reflecting its increased debt levels.
  • Institutional investors often have policies restricting them from purchasing bonds with a bond rating below investment grade.
  • A strong bond rating of AAA allows a government to borrow money at very low interest rates.
Advanced Usage
  • "to have a bond rating of": This phrase is used to state the specific letter grade assigned.
    • The municipal bond has a bond rating of A+, making it a relatively safe investment.
  • The concept is central to fixed-income markets, influencing yield spreads and investment mandates.
Variants and Related Words
  • Credit Rating: A broader evaluation of an entity's general creditworthiness, not limited to a specific bond issue.
  • Rating Agency: An organization, such as Standard & Poor's, Moody's, or Fitch, that issues bond ratings.
  • Investment Grade: A bond rating category (typically BBB- or Baa3 and above) denoting lower risk.
  • Junk Bond / High-Yield Bond: A bond with a rating below investment grade (BB+ or Ba1 and below), indicating higher risk.
Synonyms
  • Credit assessment
  • Credit grade
  • Debt rating
Related Phrases
  • "to assign a bond rating": The action performed by the rating agency.
    • The agency will assign a bond rating to the new corporate issuance next week.
  • "bond rating downgrade/upgrade": A change in the rating, typically due to a change in the issuer's perceived financial strength.
    • The market reacted negatively to the bond rating downgrade.
bond rating

A financial analyst reviews a bond rating report on her computer screen.

Noun
  1. an evaluation by a rating company of the probability that a particular bond issue will default
    • the bonds of highest quality are said to have bond ratings of AAA