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Play in the bond market|Credit rating of bonds

In the risk of bonds, FUTU BULL true feelings tell you that "investing in bonds is risky and buying and caring". Did you pour a pot of cold water on you who are eager to try? Many investors are deterred by all kinds of risks, the most confused of which is credit risk, which will lose money and interest with a little carelessness.

However, in fact, credit rating agencies effectively prompt their default risk by grading different bonds, and become the most straightforward and efficient tool for investment.

1. The "Big three" of credit rating agencies

Bond credit rating is a measure of the probability of bond default risk. To put it bluntly, it ranks the ability of different companies to repay their debts and withstand a variety of financial and economic pressures in the bond market.

Credit rating agencies use their professional quantitative and qualitative analysis to give forward-looking opinions on a company's ability and willingness to repay interest and principal on schedule. Based on the open credit rating of rating agencies, investors can assess in advance how likely the funds are to return to their pockets.

The current 9 nationally recognized statistical rating organizations registered on the SEC official website

Among them, Moody's Investment Services Co., Ltd.(Moody's), Standard & Poor's (S & P) and Fitch International Credit rating Co., Ltd. (Fitch Group)Is the three most influential credit rating agencies in the international bond market.

Some people may wonder how the famous Morning Star rating in the investment world has been wiped out by FUTU BULL? In fact, Morning Star rating is a rating system for public funds. Based on the past performance of the Fund, it has become an important reference tool for many investors. FUTU BULL will be described in detail in the following fund article, here we first focus on the Big three.

2. Interpreting the Secret behind symbols: credit rating system and grading

The way the Big three is divided into long-term bond rating and short-term bond rating is mainly divided into long-term bond rating and short-term bond rating. NOne standard, and almost the letters are used at the same time. Using A to Z to represent the credit rating of the company, to evaluate the repayment ability of bond issuers, and ultimately to assess credit risk.

Moody's, Standard & Poor's, Fitch International Credit rating Classification method

Take Moody's long-term credit rating as an example, a total of 21 grades, of which the highest credit rating is Aaa Class, the lowest is C Level, each grade is followed by numbers to further subdivide the level of credit, so that fine-tuning can avoid excessive generalization of rating results.

And Moody's Baa For the watershed, the degree of credit is classified as investment grade and speculative grade. From Aaa To Baa Grade is investment grade, such bonds have high reputation and have a small risk of default.

The rating is Ba Bonds below are usually referred to as speculative bonds, also known as "high-yield bonds" or "junk bonds". Such bonds are seen as highly speculative and at high risk of default, but often attract batches of "successive" investors because of high yields.

3. Superstitious credit rating? Watch out for Waterloo!

Although credit rating is indeed an intuitive and convenient screening tool, it can only play a limited role in investment decisions, and blind superstition will inadvertently bring investors into the "gap".

First, credit ratings are only a reference to default risk, not recommendations for buying, selling, or holding.

Secondly, credit rating also has different reference significance for different types of investors. If you're all in line with low risk, then A Bonds above class 1 are the first choice for investment; but if you are adventurous, you may prefer to allocate some high-yield ones B Class I bonds. Ratings do not tell investors which bonds are better suited to their investment preferences.


Through the development of a simple symbolic system, credit rating agencies provide risk reference for creditors, in order to avoid the disheartening credit risk. But although the rating is reliable, do not blindly rely on yo.

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