The process of moving credit ratings of different issues up or down from the issuer rating in response to different payment priorities is best described as:
A) notching.
B) structural subordination.
C) cross-default provisions.

Question

Quizplus · Accepted Answer

Notching is the process of adjusting the credit rating of a security or issue based on its priority of payment compared to the issuer's overall credit rating. Structural subordination refers to the inherent subordination of certain securities within an issuer's capital structure, while cross-default provisions are clauses in contracts that allow for cross-default if a specific event occurs.

The Process of Moving Credit Ratings of Different Issues Up