Bond Rating

What does Bond Rating mean in American Law?

The definition of Bond Rating in the law of the United States, as defined by the lexicographer Arthur Leff in his legal dictionary is:

Evaluations of the quality (which, by and large, means safety) of bonds, both public and private, systematically carried out by several bond rating companies. Since, as a general rule, the safer the bond the less interest the issuer must pay, a drop in rating is costly. And if the rating drops so far as to indicate a real risk that the borrower”s obligations will not be paid, the borrower may be effectively shut out of the bond market until its position improves, e.g., New York City”s situation in the late 1970″s.