25 years: Treasury & ALM
Investors in a company’s debt rely on the company’s credit rating to determine whether the risk is worth taking. In this video, Moorad explains what a credit rating is, how a formal credit rating is calculated and how it is used to determine the level of risk of holding a particular debt issue.
Investors in a company’s debt rely on the company’s credit rating to determine whether the risk is worth taking. In this video, Moorad explains what a credit rating is, how a formal credit rating is calculated and how it is used to determine the level of risk of holding a particular debt issue.
6 mins 25 secs
Investors in a company’s debt rely on the company’s credit rating to determine if the risk that such debt represents is one that they would wish to take, in return for the expected reward that holding the debt issue should bring. Hence, having a high credit rating is of great importance to issuers of debt.
Key learning objectives:
Define credit rating
Understand what credit ratings are applied to
Outline the two methods investors employ in measuring credit risk