Downgrade Risk

The Economic Times  Sep 18  Comment 
Gradually add companies with strong franchise and healthy projected volume growth.
Reuters  Jul 22  Comment 
Reuters Market Eye - The weak rupee, along with slow growth, deterioration in the current account, and the likelihood of fiscal worries could revive sovereign ratings downgrade risks for the country, DBS says in a note.
The Straits Times  Nov 20  Comment 
HONG KONG: Commodities trader Noble Group may dodge the downgrade bullet, even after poor third-quarter results, but it has its work cut out to convince investors that its risk management is robust enough to withstand increasingly volatile markets.
Reuters  Oct 27  Comment 
A growing number of U.S. lawmakers do not think another downgrade of the country's AAA rating will harm America's economy, raising questions about how much pressure Congress is under to fix the intractable budget deficit.  Aug 2  Comment 
NEW YORK (BBH FX Strategy) -- Here is some more color on the Fitch comments on the U.S. First headline to hit the tapes was that the "deal reached is commensurate with AAA rating." However, the full statement is that "commensurate with its 'AAA'...
FX Street  Aug 1  Comment 
Risk appetite improved as Congressional leaders struck a deal over the weekend, however the U.S.... For more information, read our latest forex news and reports.
Reuters  Aug 17  Comment 
Moody's Investors Service said on Tuesday the top AAA ratings of the United States, Great Britain, France and Germany are well positioned but face new challenges that increase the possibility of a downgrade.


Downgrade risk is the risk that a bond price will decline due to a downgrade in its credit rating. Credit ratings, assigned by agencies such as Moody's or S&P, are indicators of default risk (the possibility that the issuer cannot pay the bondholder) on a particular bond. Lower ratings suggest that a bond issue is riskier than an issue with higher ratings, which in turn leads to a lower price. A downgrade, therefore leads to a lower price.

The downgrade risk arises from deteriorating financial condition of a company, and every bond faces this risk to a certain extent.

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