EDU Articles
Learn about investing, trading, retirement, banking, personal finance and more.
B-/B3 — credit rating
B- — S&P / Fitch
B3 — Moody’s
In the world of junk bonds, a B3/B- rating is about as low of a rating as most investors will venture to explore.
Bonds are rated by independent ratings institutions known as the Big Three: Moody’s, Fitch, and S&P. Two companies, S&P and Fitch, use the same symbols, and the B- in this example belongs to them. Moody’s has its own system, and the B3 in this example is theirs.
The ratings are used for companies, insurers, as well as bond issues. Investment Grade bonds range from AAA/Aaa to BBB-/Baa3, and Junk bonds (aka High Yield Bonds) fall in below that, ranging from Ba1/BB+ to D/DDD.
The rating in question here, B3/B-, is on the low end of the “Highly Speculative” subset.
The risk of an issuer defaulting, or not making the bond interest payments in a timely manner, is over 20%, with only 20% or so of those who defaulted resuming payments later (the “recovery rate”). To make this a risk worth taking, issuers of these bonds must make their yields relatively high compared to the investment grade, low-risk bonds.
This higher rate is known as the risk premium, and how much more the premium is for a given amount of risk depends on market conditions, including how high the risk-free rate of 10-year Treasuries is.
What is a Private Placement?
Investing in a private placement opportunity is done off-exchange, and usually involves a small number of investors
What is the “Period Income” Option on Annuities?
The Period Income option on Annuities means that the balance will be paid out in equal amounts over a set number of years
What is Insider Trading?
Simply put, insider trading is the crime of trading in a company’s stock based on information not available to the public
Is there any merit to some other portfolio theories?
Plenty of theories are known because they are useful, and it is up to you to discern which ones may be worth your time
Why Should I Have a 401(k)?
You can break down the primary benefits of a 401(k) to 3 things: Tax-Deferred Growth, Employer Contributions, Convenience
What is a Balance Sheet?
A company's balance sheet gives a picture of how all the assets, liabilities, and equities of the company "balance out"
What is a Basis Point?
When percentages being used to describe a security are very small, basis points are often used to describe the numbers
What is Net Income?
Net income is the amount of earnings left over once expenses have been deducted from sale. In short, it's net profit/loss
What is the House Price Index (HPI)?
The House Price Index (HPI) tracks average prices of homes using data from sales and refinancing, tracking the data...
How Do You Store Your Bitcoin?
Once you have acquired bitcoin, you will want to make sure that you store it in a secure fashion that suits your taste and needs