On Bond Ratings and Pension Obligations: A Note

Abstract

Financial analysts have been intrigued by bond ratings since John Moody first started publishing them in 1909. Bond ratings are assigned by three agencies (Moody's, Standard and Poor's (S&P), and Fitch); these ratings are widely publicized and are, therefore, critically important. A bond's rating affects investors' purchase decisions and, consequently, the issuing firm's cost of debt and, indirectly, its cost of equity.