Bond Ratings. Mitchell Dietrich BA 543 May 12, 2005. What are Bond Ratings?. A bond rating is an opinion of the ability of issuer to honor their financial obligation to make coupon or principle payments. The higher the rating the less likely an issuer will default. Who issues bond ratings?.
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May 12, 2005
A bond rating is an opinion of the ability of issuer to honor their financial obligation to make coupon or principle payments.
The higher the rating the less likely an issuer will default.
The future of these bonds cannot be considered as well assured. These bonds face exposure to adverse business or economic conditions which could lead to an issuer’s inadequate capacity to meet its financial commitment.
Short-term ratings are opinions of the ability of issuers to honor short-term financial obligations. Ratings may be assigned to issuers, short-term programs or to individual short-term debt instruments. Such obligations generally have an original maturity not exceeding thirteen months, unless explicitly noted.
P-1 Issuers rated Prime-1 have a superior ability to repay short-term debt obligations.
P-2 Issuers rated Prime-2 have a strong ability to repay short-term debt obligations.
P-3 Issuers rated Prime-3 have an acceptable ability to repay short-term obligations.
NP Issuers rated Not Prime do not fall within any of the Prime rating categories