Talk:Fitch Ratings
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Excuse me for asking a stupid question, but after reading this article [1] they say "Moody's made a lot of Canadians mad. When the credit rater considered cutting Canada's debt, and its interest rate rose, the government suddenly faced the prospect of about $300 million in added payments on its bonds.
While just a fraction of Canada's overall debt, it was a significant cost for a cash-strapped government about to lay off 45,000 employees." I understand from that statement that Canada government lost 300 millions. Why exertly does that money goes?
i think i understand where the question comes from but it's strange none the less, money doesn't "go" anywhere what happened was that the price for debt went up. think of money as commodity, a country with a lower ranking has smaller chance of paying you your back (country's like people and companies sometimes default on debts becoming essentially bankrupt, more then 100 country in the last century )so you demand higher pct for any dollar you lend. a bond ranking (moody's S&p, or fitch) give you a representation of how dangerous a borrower someone is, so instead of getting to borrow money for 5% the marker is only prepared to lend at 5.5% the extra 0.5% represents the added risk premium and in money terms 300m ( in that case). The country now has to pay back a larger sum of money and the lender (the purchaser of the bond) if he chooses to hold to the bond receives an asset with a higher return and a higher default risk. —Preceding unsigned comment added by 212.117.141.34 (talk) 15:43, 10 February 2008 (UTC)
