Rating

  

Categories: Bonds

It was an A-minus. You heard her mumbling that in her sleep. It was a put-off at first, but then you thought, "Hey, an A-minus ain't bad. And then you heard her mumbling about better cash liquidity, and you realized it was something completely different.

The ratings of the bonds traded publicly on your company were just about to be upgraded from an A-minus to a single A (assuming it was S&P doing the ratings). And then...that was it. She started snoring.

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Finance: What are Bond Ratings, and What...41 Views

00:00

- a la shmoop. what our bond ratings and what do they mean?

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all right well pressed, we'd say Sean Connery,

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but Daniel Craig has been pretty amazing and exceeded all expectations right? okay [Actors Connery and Craig shown]

00:16

okay so we love double-oh-seven but well that has nothing to do with this topic.

00:20

here we're referring to how risky or safe a given bond is. if you just landed

00:26

on earth remember that a bond is a promise to pay back money after having

00:30

rented it in the form of interest payments for a given period of time. and

00:35

some bonds are well ,they're risky. famously the bonds issued by the

00:39

territory of Puerto Rico went crashing to the ground when the country [Puerto Rican city pictured waving a white flag]

00:42

essentially declared bankruptcy in 2017. well corporate bonds die as well as

00:48

government bonds. when the internet and wireless technology radically changed

00:52

the economics of the radio and newspaper industries well many of those

00:56

corporations saw their bonds kissed the perimeters of bankruptcy. so bonds can be

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risky despite the vast 99% plus of them who fully pay back their interest and

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principal on schedule. but some don't though or have to delay payments or have

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other issues and to account for this risk and to communicate that risk to [two workers from Chase bank stand hands on hips shaking heads]

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would-be investors, there are rating services who assess the borrower's

01:21

ability and likelihood to pay back the money they have promised to the you know

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pay back. well the top ratings are shown here,

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those triple-a bonds are a really good ones. if a bond flunks completely well it

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gets something in the C range. that we have California grade inflation here and [bond rating chart pictured]

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you know talk about grading on a curve. and that is how you get your bonds

01:41

shaken and not stirred. [man holds martini glass]

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