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Home > QFINANCE Dictionary > Definition of downgrade

Definition of


  • 1.

    reduce projection for stock price to change the forecast for a stock price to a lower one

  • 2.

    reduce bond rating to change the credit rating for a bond to a lower one

downgrade - Related Articles
  • Minimizing Credit Risk

    Best Practice

    Financial corporations and investors face several types of risk. One major risk is credit risk. Despite the fact that market participants typically refer to “credit risk” as if it is one-dimensional, there are actually three forms of this risk: credit default risk, credit spread risk, and downgrade
    By Frank J. Fabozzi

  • How to Use Credit Rating Agencies


    of the interest on loans in order to compensate the lender for the higher risk that the loan may not be repaid. The rating agencies constantly monitor all the instruments they rate and will issue upgrades or downgrades if an issuer’s creditworthiness has changed.

  • Using Securitization as a Corporate Funding Tool

    Best Practice

    A case study of the use of securitization to reduce funding costs is provided by Ford Motor Company. In 2001, the auto manufacturer was facing the downgrade of its credit rating to that of noninvestment grade status (more popularly referred to as “junk bond” status). As a result, in early 2002 its
    By Frank J. Fabozzi

  • Bahrain

    QFINANCE Country Profiles

    In June 2011, Moody’s downgraded Bahrain’s sovereign credit rating to Baa1 from A3, citing the political turmoil and fundamental weaknesses in the country’s large banking sector as a motivation for the downgrade. According to the ratings agency, Bahrain is the only GCC member state that “does


Definitions of ’downgrade’ and meaning of ’downgrade’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’downgrade’ and other financial terms with our online QFINANCE Financial Dictionary.

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