Upgrade

AAA

DEFINITION of 'Upgrade'

A positive change in the rating of a security. An upgrade is usually triggered by a steady improvement in the fundamentals and financials of the entity that has issued the security. Upgrades to the credit rating of corporate issuers of debt securities are issued by rating agencies, such as Standard & Poor's.


Upgrades to investment ratings for stocks and fixed-income securities are issued by equity and bond analysts respectively at brokerage houses. In the context of portfolio management, the term "upgrade" also refers to a strategy whereby the risk profile and quality of the portfolio is improved by including blue-chips in it, while eliminating speculative stocks.

INVESTOPEDIA EXPLAINS 'Upgrade'

For example, a rating agency may upgrade the credit rating of an issuer from AA+ to AAA. Such a move would have a positive effect on all outstanding bonds and other fixed-income instruments of the issuer.


An example of an equity upgrade would be an analyst raising the investment rating for a particular stock (or sector) to "buy" from "hold". An upgrade of this nature would sometimes be accompanied by an upward revision in the analyst's target price for the stock.

RELATED TERMS
  1. Credit Rating

    An assessment of the credit worthiness of a borrower in general ...
  2. Downgrade

    A negative change in the rating of a security. This situation ...
  3. Underperform

    An analyst recommendation that means a stock is expected to do ...
  4. Outperform

    An analyst recommendation meaning a stock is expected to do slightly ...
  5. Focus List

    A list of recommended stocks published by an investment firm's ...
  6. Prime Credit

    A credit score that falls into the range that is one step down ...
RELATED FAQS
  1. No results found.
Related Articles
  1. Investing Basics

    Analyst Recommendations: Do Sell Ratings Exist?

    Analyst reports can be an investor's best friend - but without knowing how to read them, you won't be able to fully utilize them.
  2. Investing Basics

    What Is A Corporate Credit Rating?

    Is the bond you're buying investment grade, or just junk? Find out how to check the score.
  3. Investing Basics

    Why There Are Few Sell Ratings On Wall Street

    We outline reasons that may show why enforcing more sell ratings isn't guaranteed to increase Wall Street's objectivity.
  4. Credit & Loans

    The Importance Of Your Credit Rating

    A great starting point for learning what a credit score is, how it is calculated and why it is so important.
  5. Bonds & Fixed Income

    Why Bad Bonds Get Good Ratings

    Credit ratings are not the only tool to rely on when assessing bonds. Find out why they sometimes fall short.
  6. Economics

    Does A Junk Rating Reflect Russia's Fundamentals?

    Moody’s, like other credit rating agencies, has downgraded Russia’s sovereign debt rating to non-investment grade, but does this reflect Russia's economy?
  7. Economics

    What Would Happen If Interest Rates Rise?

    This time around, while U.S. long-term yields have rebounded from their January lows, rates have generally been lower than where they ended 2014.
  8. Investing

    Strategies To Position Your Bond Portfolio

    Fixed income investors may not be able to see them all right now, but important trends are stirring on the investment horizon.
  9. Savings

    How To Make Money With Airbnb: Risks & Rewards

    Airbnb lets you turn your home or spare room into extra cash. Here's how to make money and protect yourself from the risks.
  10. Investing

    What does Investment Grade Mean?

    Investment grade is a term used to describe a favorable rating for corporate and municipal bonds.

You May Also Like

Hot Definitions
  1. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  2. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  3. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  4. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  5. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  6. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
Trading Center