If the Ohio Teachers Retirement Fund is considering buying bonds issued by Johnson Electric Corporation and is wanting to evaluate the default risk of the bonds, under the current business model used by the bond-rating agencies, Johnson Electric Corporation must pay the bond-rating agencies to provide the bond rating.

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Bond-rating agencies, such as Moody's, Standard & Poor's, and Fitch, typically charge the issuers of debt, like Johnson Electric Corporation, for the service of rating their bonds. This model is used to assess the creditworthiness of the bond issuer, which helps investors, including the Ohio Teachers Retirement Fund, evaluate the default risk of the bonds.

If the Ohio Teachers Retirement Fund Is Considering Buying Bonds