Downgrade

AAA

DEFINITION of 'Downgrade'

A negative change in the rating of a security. This situation occurs when analysts feel that the
future prospects for the security have weakened from the orginal recommendation, usually due to a material and fundamental change in the company's operations, future outlook or industry.

BREAKING DOWN 'Downgrade'

Analysts place recommendations on securities to give their clients or investors a general idea on the expected performance of that security looking forward. These recommendations are adjusted when the basis behind the recommendation changes, such as the price of the stock or newly released data in the company's financial statements.

An analyst may downgrade a stock from a buy to a sell, after the company released information about an Securities and Exchange Commission investigation into the company's operations.

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RELATED FAQS
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    The funds from operations (FFO) to total debt ratio is used in fundamental analysis to determine a company's financial risk. ... Read Full Answer >>
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    Stability is relative in the municipal bond market. Municipal bonds tend to be safer than many other types of investments, ... Read Full Answer >>
  3. Where can I find information about corporate bond issues?

    Information about new and existing corporate bond issues is published regularly in financial newspapers, such as The Wall ... Read Full Answer >>
  4. Why are high yield bonds typically lower rated bonds?

    The term "high-yield bond" is a bit of a misnomer. It is not the case that high-yield bonds tend to be lower-rated; instead, ... Read Full Answer >>
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