A Comparison of Bond Ratings from Moody's S&P and Fitch IBCA

Financial Markets Institutions & Instruments, V. 8, N. 4, August 1999

45 Pages Posted: 25 Jan 2018

See all articles by Jeffrey Jay Jewell

Jeffrey Jay Jewell

Lipscomb University - Department of Accounting, Finance & Economics

Miles Livingston

University of Florida - Department of Finance, Insurance and Real Estate

Date Written: January 16, 1999

Abstract

Previous research has found that the bond market values the ratings of Moody’s and Standard & Poor’s. This paper extends earlier research by comparing the ratings of Moody’s, Standard and Poor’s, and Fitch IBCA. The authors examine a very large database with monthly observations of bonds and bond ratings over a five-year time period. The analysis focuses on comparing rating levels, rating changes, and the impact of ratings on bond yields. The results show that firms with publicly available Fitch IBCA ratings have higher ratings from Moody’s and S&P than firms without Fitch IBCA ratings. The typical firm releasing a Fitch IBCA rating has a lower yield (controlling for Moody’s and S&P rating), a more stable rating, and is more likely to receive an upgrade. For split-rated bonds (Moody’s vs. S&P), Fitch IBCA serves as a tiebreaker. This evidence is consistent with the bond market valuing the ratings of all three raters—Moody’s, Standard & Poor’s, and Fitch IBCA.

Keywords: bond ratings, Fitch, three ratings

JEL Classification: G24

Suggested Citation

Jewell, Jeffrey Jay and Livingston, Miles B., A Comparison of Bond Ratings from Moody's S&P and Fitch IBCA (January 16, 1999). Financial Markets Institutions & Instruments, V. 8, N. 4, August 1999, Available at SSRN: https://ssrn.com/abstract=3103130

Jeffrey Jay Jewell

Lipscomb University - Department of Accounting, Finance & Economics ( email )

One University Park Drive
Nashville, TN 37204-3951
United States
6159665769 (Phone)

Miles B. Livingston (Contact Author)

University of Florida - Department of Finance, Insurance and Real Estate ( email )

P.O. Box 117168
Gainsville, FL 32611-7168
United States
352-392-4316 (Phone)
352-392-0301 (Fax)

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