Series 79 practice questionmediumDebt Offerings
Why are rating agency presentations important in many debt deals?
- ACredit ratings can materially affect investor demand and pricing✓ Correct answer
- BRatings replace the prospectus
- CRatings are required only for municipal offerings
- DRatings eliminate covenant packages
Explanation
Why A — Credit ratings can materially affect investor demand and pricing
Credit ratings can materially affect investor demand and pricing Many bond investors are highly sensitive to rating outcomes, which influence perceived risk and spread levels. Bankers therefore prepare rating materials carefully before launching the deal.
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