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Split bond ratings: Evidence from Japanese credit rating agencies

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  • Tanaka, Takanori

Abstract

This study examines why split bond ratings occur between credit rating agencies with different reputations in Japan. Using a sample of Japanese corporate bonds newly issued during the 2006–2021 period, I find that the ratings assigned by a less reputable Japanese rating agency (JCR) are significantly higher than those by a more reputable Japanese rating agency (R&I) for the same bonds because JCR is likely to rate the creditworthiness of bond issuers more highly than R&I. The disagreement between JCR and R&I over the creditworthiness of issuers causes split bond ratings. Moreover, bonds with multiple split ratings have higher yield spreads.

Suggested Citation

  • Tanaka, Takanori, 2024. "Split bond ratings: Evidence from Japanese credit rating agencies," Research in International Business and Finance, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:riibaf:v:71:y:2024:i:c:s0275531924002617
    DOI: 10.1016/j.ribaf.2024.102468
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