financial institution cost of debt

So I been looking at the yield to maturity on bond issues by financial insititutions vs, those of industrial companies. Why is the YTM a fair bit higher at the same credit rating for financial institutions than it is for industrial companies??

I would guess that markets have taken a bearish view on the risks within financials. Combine that with the fact that ratings are generally formed on current and past data and not intended to be forward looking predictions, you get your difference.

Evidently, the market disagrees with ratings agencies.

I’d also say financial company balance sheets are less transparent. Couple that with the current economy and I think you have increased risk in that sector.

Maybe the type of bonds, e.g. junior vs senior (debantures vs bonds)?

I also agree with ohai. Perhaps the market is now taking rating agencies’ ratings with a pinch of salt.

I still find it ridiculous that those are written into laws by governments (“XYZ shall not invest in bonds with ratings below BBB”) as if ratings agencies are God.

Even for same credit rating, it would generally be expected that the PD varies for different industry sectors. Maybe that is one of the contributing factors.