Bond rating agencies are organizations that provide information about bonds to bond investors. They prove to be very useful in providing information on credit ratings for issuers of bonds. Rating agencies come out with regular reports on the ratings of bond issuers, which include updates for public access, particularly for the benefit of investors; governments and financial organizations also use these reports.
These agencies perform a very useful function in the finance industry, especially since credit ratings play a huge role in helping investors determine where to place their money. They give information on a company’s performance, as well as how well its securities have done over a given period of time. They also supply information on current market trends that may also determine how well such securities are expected to fare in the near future. Examples of rating agencies are Fitch Ratings, Standard and Poors, and Moodys.
Since these agencies carry with them such great influence and responsibility, they can also be a target for criticism. The ratings they issue affect general investment behaviors, so questionable credit ratings could eventually cause some financial problems. If the rating agency does not have updated information, it could continue to show a certain rating for a company that no longer falls under that rating given its current performance. This could happen if the initial rating given was high and the company is no longer doing well enough to deserve the rating, or the opposite, in which the rating does not reflect the strong performance of the company in recent history.
