Federal regulations make it impossible for rating agencies to drop a company's credit rating more than two notches at a time in order to prevent panic in bond markets.

Question

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There are no federal regulations that specifically limit rating agencies from dropping a company's credit rating by more than two notches at a time. Rating agencies have the discretion to adjust ratings based on their analysis of the company's financial health and future outlook.

Federal Regulations Make It Impossible for Rating Agencies to Drop