Summary
Issuer Credit metrics help investors assess the financial strength of a bond issuer and its ability to meet debt obligations. These measures focus on leverage, liquidity, profitability, and debt-servicing capacity.
They are especially important for bond investors because bond returns depend on the issuer’s ability to pay interest and repay principal.
Why it matters
When buying a bond, investors are lending money to the issuer. Issuer Credit metrics help investors evaluate whether the issuer appears financially capable of meeting its commitments.
Stronger credit metrics may indicate lower credit risk, while weaker metrics may suggest greater risk.
How to read it
Issuer Credit should be reviewed using several measures together. Debt levels, liquidity, interest coverage, profitability, and cash flow all provide different parts of the credit picture.
A high yield may be attractive only if the issuer’s credit risk is acceptable.