Assessing credit rating agencies by corporate bond issuers : The case of investment versus non-investment grade bonds

We examine the views of issuers of investment and non-investment grade industrial bonds about the four leading U.S. credit rating agencies. Based on a sample obtained from the Lehman Brothers database, we find that issuers of investment and non-investment grade bonds differ significantly in their views about credit rating agencies. In addition, we find that respondents are generally satisfied with the performance of these credit rating agencies, but their level of satisfaction is higher for S&P than Moody’s. The results have implications for corporate bond participants who rely on credit ratings for corporate financing, investment decisions, and risk management.