Purchase Solution

Credit Rating: Public debt rated by a major rating agency.

Not what you're looking for?

Ask Custom Question

Why would a company pay to have its public debt rated by a major rating agency (such as Moody's or Standard and Poor's)? Why might a firm decide not to have its debt rated?

Purchase this Solution
Solution Summary

This posting examines the reason as to why companies pay to have their public debt rated and why a firm may decide not to do so in 293 words.

Solution Preview

Before a company goes to market, its finance executives need to know what its credit rating is, why it is what it is, and what they can do to influence it. Some finance executives now routinely use rating agencies before making major decisions. They want to know how their rating would be affected by a particular acquisition, stock repurchase or reorganization, so they pay rating agencies ahead of time to rate scenarios that are still ...

Purchase this Solution
Free BrainMass Quizzes
Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

View More Free Quizzes
Related BrainMass Solutions

  • public debt rated by a major rating agency

    152363 Why would a company pay to have its public debt rated by a major rating agency (such as Moody's or Standard and Poor's)? Why would a company pay to have its public debt rated by a major rating agency (such as Moody's or Standard and Poor's)?

  • municipal bond rating services

    What are the advantages and disadvnatages of replacing the present services with one done by a Federal agency? First let us begin by defining what a municipal bond is. Municipal bonds are are debt obligations of state and local governments.

  • Bond Rating firms: What is role? Players? 2008 crisis?

    Bond ratings are set by the "big three" credit rating agencies who set the ratings for bonds and other corporate debt.

  • High Yield Bond Questions

    Since the risk of default is high, these bonds pay a higher rate than high rated bonds. For example, if a bond carries a rating below BBB from S&P, it is junk bond. The lower the rating, the higher the yield you get.

  • Capital Budgeting-Accounting for Governmental Funds

    "For a fee (paid by the issuer), a credit rating agency will provide a rating of a new debt issue prior to sale and periodic updates of the issuer's credit standing" (Perry, 1996, p. 335).

  • Classification of debt and rating

    This is also the form of debt. However, when the debentures are issued to the public for subscription, the debentures are being rated by rating agencies.

  • Public Organization's Finances

    The government treasury bonds are normally not rated as they are considered credit worth and are backed by the full credit of the US Government. There are some investors that feel that the government bonds have an implicit rating of AAA. c.

  • This post addresses credit rating agencies.

    471609 This post addresses credit rating agencies. In broad terms, give us the names of the major agencies and/or firms that offer credit ratings for either consumer, commercial or national credit ratings.

  • Constructing a Table of Interest Rates

    A strong company with lots of cash reserves would merit a AAA rating, while a risky company with no cash reserves and a large amount of debt would be rated a higher credit risk. Junk bonds are defined as anything rated lower than BB.

View More Related Solutions