Corporations may use the securities markets to obtain debt capital by selling corporate bonds. Bonds are “securities” and thus are governed by the federal securities laws. To issue new bonds, a corporation will usually seek to have the bond rated by a credit rating agency such as Moody’s, Standard & Poor’s, or Fitch.
A bondholder would be concerned about whether a corporation has purchased a favorable bond rating. Should a shareholder also be worried? Explain.