What Are Rating Agencies?

Their main job is to assess the risk and determine whether ^{[1] the} bond issuer can repay the promised principal and interest to the investor. Factors to consider include the financial health of the issuer, the general situation of the financial market, and the financial situation of other companies with which the issuer does business. Bonds or other securities rated as the best quality, such as AAA grades, usually pay less interest than bonds with higher risk and lower quality. As a result, when the securities issued have a high rating, the issuer saves costs. In the subprime crisis, the risks of many mortgage-backed securities were much higher than their respective ratings, which led to many criticisms from rating agencies. Some experts believe that rating agencies have done their best to evaluate new securities that lack historical data. Critics point out that rating agencies have financial incentives to satisfy issuers who pay for their ratings, and that rating agencies often have other profitable business relationships with these companies.

rating agencies

Right!

Their main job is to assess the risk and determine whether ^{[1] the} bond issuer can repay the promised principal and interest to the investor. Factors to consider include the financial health of the issuer, the general situation of the financial market, and the financial situation of other companies with which the issuer does business. Bonds or other securities rated as the best quality, such as AAA grades, usually pay less interest than bonds with higher risk and lower quality. As a result, when the securities issued have a high rating, the issuer saves costs. In the subprime crisis, the risks of many mortgage-backed securities were much higher than their respective ratings, which led to many criticisms from rating agencies. Some experts believe that rating agencies have done their best to evaluate new securities that lack historical data. Critics point out that rating agencies have financial incentives to satisfy issuers who pay for their ratings, and that rating agencies often have other profitable business relationships with these companies.

Chinese name

rating agencies

Foreign name

Rating Agencies

Types of

Credit rating agency

main job

Scoring or rating securities such as corporate bonds

What is a rating agency?

Their main job is to assess the risk and determine whether ^{[1] the} bond issuer can repay the promised principal and interest to the investor. Factors to consider include the financial health of the issuer, the general situation of the financial market, and the financial situation of other companies with which the issuer does business. Bonds or other securities rated as the best quality, such as AAA grades, usually pay less interest than lower-risk, lower-quality bonds. As a result, when the securities issued have a high rating, the issuer saves costs. In the subprime crisis, the risks of many mortgage-backed securities were much higher than their respective ratings, which led to many criticisms from rating agencies. Some experts believe that rating agencies have done their best to evaluate new securities that lack historical data. Critics point out that rating agencies have financial incentives to satisfy issuers who pay for their ratings, and that rating agencies often have other profitable business relationships with these companies.