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Who are the three agencies today that rate bonds?
How do the three agencies classify a downgrade?
Why is downgrade a serious issue?
Solution
S&P , Moody and The Fitch Group these are 3 agencies rate the bond
Credit rating agencies grade or rate bonds dependng upon the creditworthiness and debt
repayment capacities of respective country so that providing intuitive proxy for measure of
default
Downgrade is a serious issue as if its not handelled properly it could lead to crisis like situation
and deadweight loss is seen. Downgrade rectifies the difficult future prospects of that security or
country for that matter

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