Topic_13_E1 - Topic 13 Exercise 1 Bond Analysis Securities...

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Topic 13 Exercise 1 Bond Analysis & Securities Bond Rating Information from Standard & Poor’s Ratings on fixed income instruments are widely used in the industry. The major rating agencies are Standard & Poor’s, Moody’s and Fitch. Bond ratings are used by the industry as indicators of quality and are also used by institutional investors to construct investment policy. Bond ratings are also closely watched and reported by the financial press. Basic elements of bond ratings and key components of ratings are described in the resource center of Standard & Poor’s. After accessing this material, address the following questions: 1. What does it mean if a long-term issue rating is BBB? What does it mean if a long- term rating is BB? Clicking on the long-term ratings link accesses the actual definitions. An obligor rated ‘BBB’ has Adequate capacity to meet its financial commitments. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitments.
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