An investment grade is a rating that signifies a municipal or corporate bond presents a relatively low risk of default. Bond rating firms like Standard & Poor’s (S&P), Moody's, and Fitch use ...

It all comes down to money. The credit rating is a guide to how risky buying debt is for potential investors. Independent agencies examine the metrics of a would-be bond seller to assess their creditworthiness and determine how likely that issuer might be to default on their debt.

High-grade corporate bonds are likely to grow more attractive to fund managers as bond yields are pushed higher following the US losing its last top credit grading, according to JPMorgan Chase & Co.Most Read from BloombergAmerica,

Moody's had investment grade rating on U.S. debt, ahead of the 2008 global financial crisis, current downgrade "not shocking," says expert.

As stock and bond markets reacted, the overall trend was a reversal from the risk-on environment of Q4 to a risk-off mindset in Q1 of the new year. Read more here.

After splitting the data into pre- and post-crisis periods, we find that ratings go from being significant in the 1996—2007 subsample to insignificant in the 2010—2016 period. These results support the hypothesis that adverse reputational effects weakened the value of rating agencies in investors’ decision-making process after the Great Recession.