Credit Rating

For investors who are interesting in buying debt instruments, either issued from corporations or governments, the method used to evaluate different investments is the credit rating. The credit rating essentially attempts to quantify the risk that the debtor will default. A higher risk implies a lower chance of getting repaid and the issuer is given a lower credit rating. A lower credit rating would mean that investors would want a higher yield to be compensated for the additional risk.


Investors beware: the bond market is treading in very rough waters. The sell-off we have seen of U.S. bonds might just lead to more troubles ahead for the bond market. Just take a look at the chart below. Thirty-year U.S.…

A report from Standard & Poor’s (S&P), the credit rating agency, indicates there is more than a one-third chance that Japanese sovereign debt could face a downgrade. The report stated, “…the continuing prospect arises from risks associated with recent government…

As the key stock indices approach highs not seen since just before the financial crisis, the underlying fundamentals are screaming “watch out.” The stock market could be edging higher on nothing but false optimism and greed. The most basic reason…

The Congressional Budget Office (CBO) expects the U.S. federal government to have a lower budget deficit this year than those of the previous four years—finally getting the annual deficit under $1.0 trillion (although, not by much). But I am skeptical…

The threat of another credit rating downgrade for the U.S. national debt is increasing. But it’s not just due to the government’s inability to control its deficit; it’s about items not considered in budget talks. Student debt, for example, which…

In case you thought the municipal debt crisis was over, here is a newsflash for you: Credit rating agency Moody’s Investor Services is looking to downgrade the credit rating of 30 cities in California. Should that happen, you can add…

I’ve been writing in Profit Confidential about the spree of bankruptcies in cities across the U.S. While the majority of them are in California, cities across America have been getting their credit ratings slashed. In the second quarter of this…

On the historic day of August 5, 2011, when Standard and Poor’s (S&P) downgraded the U.S.’s credit rating for the first time in its history, the world took notice. Today, credit reporting agencies Moody’s and Fitch maintain their AAA credit…

After 36 years, France has lost its coveted AAA credit rating. S&P downgraded France’s AAA credit rating one notch to AA+ late Friday, and the bad news didn’t stop in France. S&P maintained its outlook as negative for the country,…

The world economies are slowing. Japan’s credit rating was just downgraded to Aa3 from Aa2 by Moody’s due to slow growth and credit issues. My global economic analysis is that problems are brewing globally and there is a real possibility…

The new "Wall Street Reform and Consumer Protection Act" is a brick of a law at 2,300 pages. Being a mammoth, no wonder it had spawned a few unintended consequences, one being a just what is meant by credit agencies…