Reading & Understanding Market News-Rating Agencies

Rating Agencies

The most annoying news is to have a rating agency downgrading the company that you are holding. Rating Agencies are no popular with investor and they certainly have a dubious reputation.

Nevertheless, they are a respected authority in the industry and attention to this news is important. If a company is downgraded, share/cfd price most probably will go down.

Typically the head lines for this type of new are as such, rating agency S&P warn of downgrading ZXY Company. Sometimes it is just a downgrade and it will read like MOODY rating agency downgrade ZYX company to BB+ with negative or stable outlook

There isn’t much to interpret in this type of news, whether they are right or wrong the company will be affected by it. Even if the company disagree with the downgrade. Price usually go down on a downgrade and up in a upgrade. It is also important to pay attention to the outlook for the company. Sometimes the outlook is more important than the current company position.

If you are still holding your position, it is essential to follow up this issue as the company could loss market capital or go bankrupt, it would, of course depend on its particular situation.

But remember you never know when a company is going to go bankrupt till it is so. When a company share price goes substantially lower, it may never come back to its previous level for years to come.

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