Pinches, George E. and Kent A. Mingo, "A Multivariate Analysis of Industrial Bond Ratings", Journal of Finance, Vol. 28, No. 1, (March 1973), pp. 1-18.

Introduction: Industrial corporate bonds have been assigned quality ratings since the early 1900s. Each year private organizations, such as Moody's and Standard & Poor's, assign ratings to a portion of new bonds issued that year. The purpose of these ratings "...is to provide the American investor with a simple system of graduation by which the relative investment qualities of bonds may be noted" [21, p. v]. Bond ratings are based, in part, on available statistics depicting a firm's operating and financial condition. In addition to quantifiable data, the rater's qualitative judgment concerning the future ability of a firm to make interest and principal payments also influences the bond ratings. Several recent studies have met with limited success in attempting to predict bond ratings for both corporate [16, 29, 35] and municipal bonds [5, 17]. The purpose of this study was to develop and test a factor analysis/multiple discriminant model for predicting industrial bond ratings.