Hey guys, 

Quick discussion of the following question:

The notching adjustment for corporate bonds rated Aa2/AA is most likely:

  1. larger than the notching adjustment for corporate bonds rated B2/B.

  2. the same as the notching adjustment for corporate bonds rated B2/B.

  3. smaller than the notching adjustment for corporate bonds rated B2/B.

Wouldn’t this depend on what the issuer/senior unsecured bonds were rated? If the issuer was rated B2, then the bonds rated B2/B would not require any notching, but the ones rated Aa2 would have been notched up a few levels.

On the other hand, if the issuer was rated Aa2, the bonds rated B would need to be notched down, right?