Effect of Debt-to-Asset Ratio, Maturity, Guarantees, and Company Size on Bond Ratings in Construction Companies

Abstract

The purpose of this study was to determine and analyze effect of the debt-to-assets ratio, maturity, guarantee, and company size on construction company bond ratings. The population and sample of this research is construction companies that publish complete financial reports from 2014 to 2022. Data analysis uses logistic regression analysis. The results showed that: 1) Debt to assets ratio has no significant effect on the probability of bond ratings, because investors tend to buy bonds because they see the company's reputation not from the Debt to Assets Ratio obtained by the company; 2) Maturity has no significant effect on bond ratings, because investors tend to buy bonds with ages under 3 years, because companies with maturity under 3 years are able to pay off their obligations to pay the loan principal at maturity; 3) Guarantees have no significant effect on bond ratings, because investors tend to buy bonds because they look at the company's reputation, not from what is guaranteed and not guaranteed to the company; 4) Company size has no significant effect on bond ratings, because investors tend to buy bonds not in terms of company size but from the company's reputation; 5) The debt-to assets ratio, maturity, guarantee, and company size affect bond ratings.

Keywords

• Debt-To-Asset Ratio
• Bond Age
• Guarantees
• Company Size
• Bond Rating