RT Journal Article SR Electronic T1 Observed Leniency among the Credit Rating Agencies JF The Journal of Fixed Income FD Institutional Investor Journals SP 48 OP 60 DO 10.3905/jfi.2018.28.1.048 VO 28 IS 1 A1 Dror Parnes YR 2018 UL https://pm-research.com/content/28/1/48.abstract AB Credit agencies periodically change their ratings for corporate bonds. These rating modifications advance under different circumstances and occur at distinct rates. In this study, the author examines the volumes, frequencies, and likelihoods of credit rating changes as issued by Standard & Poor’s, Moody’s, and Fitch Ratings. He examines these subsequent rating modifications (both the first and the second recorded changes post the initial ratings) with a perspective of upgrades versus downgrades. Overall, he identifies a much greater tendency for rating downgrades than upgrades following new issuance of corporate debt, which suggests that the initial credit ratings are too lenient. This study, therefore, has potential inferences for fixed-income market participants, who should consider discounting reported credit ratings, at least to some degree.TOPICS: Legal and regulatory issues for structured finance, statistical methods