Читать книгу The Sterling Bonds and Fixed Income Handbook - Mark Glowrey - Страница 30

Credit quality is a measure of the issuer’s ability to service and repay its debt. In the case of gilts, US Treasury bonds and other high-quality government debt, the chance of default is low, even given the West’s addiction to deficit funding. However, for issuers lower down the food chain than our sovereign masters, the wise investor must do some homework. Credit ratings will vary greatly from one issuer to another and even between individual bond issuers from the same company, depending on the bond’s seniority within the creditor hierarchy.

Buying a bond is a serious business. You will be lending money to an organisation, and you should be comfortable that this organisation has both the ability to service the debt and to repay it in due course. Before we consider the methods of comparing and evaluating credit quality, let us consider what type of loan we will be making.