Upgrade

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.

BREAKING DOWN '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. Bond Rating Agencies

    Companies that assess the creditworthiness of both debt securities ...
  2. Security

    A financial instrument that represents an ownership position ...
  3. Corporate Credit Rating

    The opinion of an independent agency regarding the likelihood ...
  4. Exchangeable Security

    An investment instrument that grants its holder the right to ...
  5. Issuer

    A legal entity that develops, registers and sells securities ...
  6. Credit Rating

    An assessment of the creditworthiness of a borrower in general ...
Related Articles
  1. Investing

    The Power of Major Credit Rating Agencies

    The performance of major independent credit rating agencies is a controversial topic, particularly due to the strength of their influence.
  2. Investing Basics

    What's a Debt Security?

    A debt security is a financial instrument issued by a company (usually a publicly traded corporation) and sold to an investor.
  3. 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.
  4. Home & Auto

    A Brief History Of Credit Rating Agencies

    Credit rating agencies have a long history in this country. Learn about what they do and how were they developed.
  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. Professionals

    Bond Ratings

    We look at the different ratings firms and explain what different bond ratings mean.
  7. Investing

    Advising FAs: Explaining Bonds to a Client

    Most of us have borrowed money at some point in our lives, and just as people need money, so do companies and governments. Companies need funds to expand into new markets, while governments need ...
  8. Professionals

    STOCKHOLDERS OWNING 5% OF AN ISSUER’S EQUITY SECURITIES

    Stockholders Owning 5% of An Issuer’s Equity Securities The Securities Exchange Act requires that individuals or entities who acquire 5% or more of an issuer’s equity securities to ...
  9. Bonds & Fixed Income

    When Your Bond Comes Calling

    Callable bonds can leave investors with a pile of cash in a low-interest market. Find out what you can do about it.
  10. Professionals

    Bond Ratings

    FINRA Series 7 Online Study Guide - Section 4, Debt Securities
RELATED FAQS
  1. How long are credit ratings valid?

    Learn how credit ratings are issued and how long they are valid. Investors look to credit ratings to determine risk associated ... Read Answer >>
  2. How important is credit rating on a fixed income security?

    Learn how credit ratings for fixed-income securities impact the yield and provide guidance for the amount of risk for the ... Read Answer >>
  3. Does a good credit rating guarantee repayment?

    Learn how credit ratings help investors determine the creditworthiness of an issuer and the risk associated with making an ... Read Answer >>
  4. Where can I find information about corporate bond issues?

    Learn information about corporate bond investments, including where investors can access information about new corporate ... Read Answer >>
  5. What is the difference between credit rating and equity research?

    Find out how and why investors look at credit ratings and equity research to help inform their decisions for different types ... Read Answer >>
  6. What's the difference between a credit bureau and a credit rating agency?

    Learn the differences between credit bureaus that report on individuals' creditworthiness and credit rating agencies that ... Read Answer >>
Hot Definitions
  1. Goodwill

    An account that can be found in the assets portion of a company's balance sheet. Goodwill can often arise when one company ...
  2. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  3. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  4. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  5. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center