International Bonds: Credit Ratings, Issuance Process, and Dual-Currency Bonds
Tutorial 2
Q1. Why do most international bonds have high Moody’s or Standard & Poor’s credit ratings?
Credit Rating is a social intermediary service to provide credit information and reference for the community. Credit rating is aim to show the size of a credit default risk the rating object, rating agencies focus on financial conditions and historical data to give the overall valuation of object. Currently, credit rating on the issue of international bonds is the popular investment risk valuation method in the international capital market. Specifically, this is assessed on debt servicing capacity of the issue bonds in a period, its fundamental purpose is to protect the interests of investors. At present, there are about 20 credit rating agencies on the issue of international bonds over the world, Moody, Standard & Poor's are the top 2 institution all over the world. Though they are private institution, but the rating scale and guidelines gradually become recognized as internationally accepted samples with considerable authority.
Credit rating is the ‘traffic permit’ for bond issuer to enter the international bond markets. International bonds with high credit rating mastered the global information dominance and capital allocation rights. The rating will directly affect the level of costs and interest rates of oversea companies, it also can affect the strength of a business or even the survival and development of a country.
Credit rating could provide objective and impartial credit information in order to strengthen management, avoid risks, optimize investment, boost sales and improve efficiency. High credit rating can increase the international business community awareness, improve competitiveness, to expand markets, increase sales and achieve rapid development of enterprises, expanding the scope of corporate finance at the same time, promoting financing success. High credit rating also can reduce financing costs in international enterprises. Companies with
Q1. Why do most international bonds have high Moody’s or Standard & Poor’s credit ratings?
Credit Rating is a social intermediary service to provide credit information and reference for the community. Credit rating is aim to show the size of a credit default risk the rating object, rating agencies focus on financial conditions and historical data to give the overall valuation of object. Currently, credit rating on the issue of international bonds is the popular investment risk valuation method in the international capital market. Specifically, this is assessed on debt servicing capacity of the issue bonds in a period, its fundamental purpose is to protect the interests of investors. At present, there are about 20 credit rating agencies on the issue of international bonds over the world, Moody, Standard & Poor's are the top 2 institution all over the world. Though they are private institution, but the rating scale and guidelines gradually become recognized as internationally accepted samples with considerable authority.
Credit rating is the ‘traffic permit’ for bond issuer to enter the international bond markets. International bonds with high credit rating mastered the global information dominance and capital allocation rights. The rating will directly affect the level of costs and interest rates of oversea companies, it also can affect the strength of a business or even the survival and development of a country.
Credit rating could provide objective and impartial credit information in order to strengthen management, avoid risks, optimize investment, boost sales and improve efficiency. High credit rating can increase the international business community awareness, improve competitiveness, to expand markets, increase sales and achieve rapid development of enterprises, expanding the scope of corporate finance at the same time, promoting financing success. High credit rating also can reduce financing costs in international enterprises. Companies with