Skillsfirst Level 5 Diploma in Financial Trading (RQF) - Module 1 - Trading Introduction
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Skillsfirst Level 5 Diploma in Financial Trading (RQF) - Module 3 - Economic Principles
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FACTORS THAT WILL INFLUENCE BONDS PRICE

An important aspect of investing in bonds is credit ratings, this is a term used to describe a bond issuer’s ability to pay its debts, make all interest and principal payments in full and on schedule. Investors will always consider credit ratings before making any investment decision, and credit ratings of the various investments products are updated continuously. The three main credit rating agencies are:

  • Standard & Poor’s
  • Moody’s Investors Service
  • Fitch Group

Ratings are described in the following table:

Credit AgencyMoodysStandard & PoorFitch IBCA Duff & Phelps
Investment Grade
Highest QualityAAAAAAAAA
High QualityAAAAAA
Upper MediumAAA
Medium GradeBAABBBBBB
Non Investment
Lower MediumBABBBB
LowBBBB
Poor QualityCAACCCCCC
Most SpeculativeCACCCC
No InterestCCC
In DefaultCDD

Bonds rated BBB or higher by Standard & Poor’s, Fitch IBCA, Duff & Phelps, and Baa or higher by Moody’s are considered ‘Investment Grade’. Below Baa, BBB is considered ‘Junk Grade’ or speculative status.

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