The effect of industry and corporate characteristics on bond rating
The effect of industry and corporate characteristics on bond rating

Summary/Abstract: The objective of the paper is to analyse the effect of selected quantitative and qualitative variables on corporate bond rating. The primary focus is paid to the application of ordinal logistic regression and estimation of three models that are derived on the basis of macroeconomic, industry and financial variables. The overall results suggest that there are sectors with a higher probability of better rating assessment. Based on the analysis, we can conclude that although there is a significant association between industry sector and bond rating, the most significant predictors of rating are financial indicators of size and profitability of firms. The results of the analysis should be taken into account when the primary interest is to assess unrated companies or to evaluate the impact of financial performance on current rating.

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