What happens when credit rating of a bond changes?

credit rating: what happens when it changes?

Level - INTERMEDIATE

A credit rating indicates the ability of the bond issuer to pay interest and principal on a timely basis. Watch this video to learn about the link between rating and credit risk and the impact of a change in credit rating.

AUTHOR(S): Uma Shashikant

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Credit Rating: What happens when it changes?

 A credit rating indicates the ability of the bond issuer to pay interest and principal on a timely basis. Watch this video to learn about the link between rating and credit risk and the impact of a change in credit rating.

1 2 3

    1.In comparison to an 'A' rated bond, a 'AAA' rated bond would have a



  • Higher or lower credit risk, depending on industry of operation of the issuer
  • Lower credit risk
  • Higher credit risk
  • 2.If a bond is downgraded, its market price is likely to



  • Remain unchanged, as coupon is fixed anyway
  • Fall
  • Rise
  • 3.A credit rating indicates ability of the issuer of debt to



  • Repay principal and interest in a timely manner
  • Successfully implement the project for which funds have been raised
  • Retain market share for its key products during the tenure of the debt
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