Debt Securities

2019 ◽  
pp. 139-156
Author(s):  
Alan N. Rechtschaffen
Keyword(s):  
Market Price ◽  
Cash Flows ◽  
Bond Rating ◽  
Treasury Securities ◽  
Rating Agencies ◽  
Interest Payments ◽  
Bond Rating Agencies

Debt instruments obligate an issuer to make interest payments and repay principal to the buyer according to the terms of an agreement between the lender and the borrower. The yield, or market price of these debt securities is related to the yield on U.S. Treasury securities. Treasuries remain the benchmark for risk-free credit investing, and other yields are related to the risk-free return Treasuries offer. Also known as bonds, debt instruments are attractive to investors because they can provide a reliable stream of cash flows in the form of interest payments and also might provide for the repayment of principal upon maturity. This chapter discusses the features of bonds, types of bonds, bond-rating agencies, special types of debt instruments, and the Securities Act.

scholarly journals Do corporate bond rating revisions convey information about earnings and dividend changes?

2012 ◽  
Vol 9 (3) ◽  
pp. 373-393 ◽  
Author(s):  
Steven T. Anderson ◽  
Gurmeet Singh Bhabra ◽  
Harjeet S. Bhabra ◽  
Asjeet S. Lamba
Keyword(s):  
Stock Returns ◽  
Cash Flows ◽  
Corporate Bond ◽  
Bond Rating ◽  
Future Earnings ◽  
Rating Agencies ◽  
Abnormal Stock Returns ◽  
Rating Changes ◽  
Future Cash Flows ◽  
Rating Downgrades

We study the information content of corporate bond rating changes regarding future earnings and dividends. Consistent with previous findings, rating downgrades are associated with negative abnormal stock returns, while rating upgrades appear to be nonevents. For downgrades, earnings decline in the two years prior to and the year of the rating change announcement but increase in the year after the rating review. We also find that rating downgrades are followed by a subsequent downward adjustment in dividends. While rating upgrades follow a period of rising earnings, they do not signal any increase in future earnings and no subsequent dividend adjustments are observed. Overall, our results indicate that rating agencies respond more to permanent changes in cash flows and provide little information, if any, about future cash flows.

scholarly journals Bond Ratings And Their Determinants In A Changing Environment

2011 ◽  
Vol 9 (1) ◽  
pp. 132 ◽  
Author(s):  
Christina Ho ◽  
Ramesh P. Rao
Keyword(s):  
Changing Environment ◽  
Bond Ratings ◽  
Bond Rating ◽  
Rating Agencies ◽  
Stable Period ◽  
Over Time ◽  
Bond Rating Agencies

This study finds that bond rating agencies, to the extent that their behavior is captured in statistical rating models, tend to emphasize different variables over time and that this appears to be systematically related to the economic macro-environment. Specifically, the study finds that bond ratings are more sensitive to various measures of cashflow stability and solvency in an economically unstable period relative to a more stable period.

Public Policy Made by Private Enterprise: Bond Rating Agencies and Urban America

2015 ◽  
Vol 44 (6) ◽  
pp. 1098-1112 ◽  
Author(s):  
Roger Biles
Keyword(s):  
Public Policy ◽  
World War Ii ◽  
Local Governments ◽  
Municipal Bonds ◽  
World War ◽  
Public Officials ◽  
Bond Rating ◽  
Rating Agencies ◽  
Urban America ◽  
Bond Rating Agencies

Since World War II, and especially since the1970s, cities have increasingly relied on municipal bonds as a crucial source of income. At the same time, the bond rating agencies have exerted more influence on potential investors—a development with significant consequences for the nation’s cities. The need for elected officials to measure their actions against possible rewards and punishments imposed by the bond rating agencies allowed private businesses to shape public policies in distant places impervious to the mandates given democratically elected local governments. This paper examines the challenges faced by public officials in three cities (Philadelphia, Chicago, and Detroit) because of the power wielded by bond rating agencies.

Bond rating agencies and their role in bank market discipline

1992 ◽  
Vol 6 (3) ◽  
pp. 249-263 ◽  
Author(s):  
Robert Schweitzer ◽  
Samuel H. Szewczyk ◽  
Raj Varma
Keyword(s):  
Market Discipline ◽  
Bond Rating ◽  
Rating Agencies ◽  
Bond Rating Agencies
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