Question

Why credit rating is important? Give a couple of examples of the ratings on interests paid.

Answer 1

Credit rating the assessment of the creditworthiness of the borrower. As we know fixed income securities are needed to serve on periodic basis. They cannot forgo the repayment. An investor of these securities may want to know about the ability of the company to repay these so that they would not get affected. This helps the investor from losing their hard earned money and this is the reason why it is important. There may be several rating on interests such AAA, AA, A+, etc. The credit rating agencies assign different symbols to different securities.