A Study on the Determinant Factors of Bond Rating

Abstract

Bond rating analysis evaluate corporate bond selecting many different items through a large variety of views. However, specific items and methods for evaluation are unrevealed. If the details of evaluation become clear, companies planning to issue bonds can rate bond of its own company beforehand, so it would be very important information for fund procurement. This paper tries to speculate the factors, which may affect greatly to bond rating by confining to the information on financial statements. And if the factor(s) are controllable for a company, it is possible to obtain and maintain a high rating, which is extremely important for them. Also, approaches to conduct this factor analysis are seemed to be different between Japanese and American bond rating organizations. Thus, this paper identifies the differences between them.