Some films are so bad, even the censors can’t watch them. But that’s not the case here.
“Not Rated” refers to bonds, usually muni bonds which, for a variety of reasons, never went through the formal ratings process, wherein people from Moody’s or Fitch’s or Standard and Poors meter, measure, and assess the cash flows predicted to pay off the bonds’ principal and interest…and decide whether the bonds are safe, safer, or safest.
Why would a muni choose to not get rated? Well, for one, the ratings process is expensive. It takes time. And some muni bond offerings have enough of a built-in following, i.e. local people who know the offering well, have likely owned others in a series of similar bonds, and are totally happy to just continue investing, buying more munis. And, well, the issuing city just doesn’t really need a rating. And for marketing purposes, many not rated bonds actually want to be able to pay a tiny bit more in interest...like, 10 basis points...in return for having tons of demand from buyers out there who trust their brand and certainty of payment. Like...a bond that isn't FDIC insured might still have great credit ratings. Or...note that the Army-Navy Credit Association isn't rated, but can you ever imagine that thing going bust? Yeah. Nah gawan haappen.
So take the skosh of extra interest payments and sleep well.
Related or Semi-related Video
Finance: What are the Differences in S&P...27 Views
finance a la shmoop what are the differences in S&P's, and Moody's
ratings? capital letters. really that's about it the assessment of the rating
itself is about the same. the people work at both companies all came from about [grinning men walk in front of a school]
the same schools the same semi diversified backgrounds and well they
all eat the same white bread. note the nomenclature differences here though.
Moody's does in fact look kind of moody with a big fat capital letter in the
beginning followed by small letters and slightly different notations. the S&P is
all in caps all shouting all the time. the metrics behind say a quote highly [chart shown]
speculative bond unquote down here are about the same for both companies but
the slight differences are worth noting so that when you see a rating well you
know just by the way in which it's written who wrote it.
now as for actually understanding bond ratings well that's a different story. to [document shown]
most people they might as well be hieroglyphics. [confused woman reads paper]
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