A company’s bond ratings might
A company’s bond ratings might in concept be similar to your ownpersonal credit ratings. Use an example of how someone’s personalcredit rating might affect their financial life — and thentranslate that to how a bond rating might affect a company’sfinancial choices.
Answer:
Bond credit rating for a company is reflecting thecreditworthiness of the company in respect to discharge their debtand it will reflect the ability of the company to repay all of theloans.
Personal credit rating will be reflecting the creditworthinesson a part of an individual and his ability to deal with it’s debtand his past performance in relation to the credit.
When an individual will be having a very high credit rating thenhe will be believed to be creditworthy & he can get loans veryeasy because he will be having a regular stream of income and pastperformance that would be leading to getting loans in quickeramount of time without much hindrances
Bond rating will also be helping the company to raise capital atvarious rates and if the company will have a lower credit ratingthen people will not be trying to subscribe its debt instrument andit will have to issue higher yield in order to attract people tosubscribe its bonds, so, it is very important to have a high creditrating in order to raise finance at low rate and it will also beconsidered secured for the bondholders.
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