Hi Scott,
Take this for what it is, I'm not a financial specialist, but I believe a lower bond rating means that if CAWS attempted to raise money by selling bonds, the bonds would be riskier to the buyers. ie CAWS would have to offer a higher yield. In other words the bonds would be more similar to junk bonds. In effect this makes this financing option less viable. CAWS would need to turn to another method of raising money. Another stock offering? Other methods? I'm not sure what the effect of this lower rating is on any existing bonds CAWS might already own.
Again everyone, I don't claim these statements to be fact, you'll have to check it out from other sources...that means you too, Steve A.
Went and got this from INFOSEEK:
BB-B-CCC-CC-C - Bonds rated "BB", "B", "CCC", "CC" and "C" are regarded,on balance, as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligations. BB indicates the lowest degree of speculation and C the highest degree of speculation. While such bonds will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions.
...Not sure if this is the correct rating system, but you get the idea. |
