Showing papers by "Queensland University of Technology published in 1984"

The Informational Content of Bond Ratings

Abstract: This paper explores the risk structure of interest rates. More specifically, we ask whether yields on industrial and commercial bonds indicate that market participants base their evaluations of a bond issue's default risk on agency ratings or on publically available financial statistics. Using a non-linear least squares procedure, we relate the yield to maturity to Moody's rating, Standard & Poor's rating, and accounting measures of credit worthiness such as coverage and leverage. We find that market yields are significantly correlated with both the ratings and with a set of readily available financial accounting statistics. These results indicate (1) that market participants base their evaluations of an issue's credit worthiness on more than the agencies' ratings and (2) that the ratings bring some information to the market above and beyond that contained in the set of accounting variables. In addition, our results suggest that the market views Moody's and S&P's ratings as equally reliable measures of risk. Although the accounting measures also affect yields on new or recently reviewed issues, our analysis suggests that the market may pay more attention to the accounting measures and less to the ratings if the rating has not been reviewed recently.

New Estimates of the Value of Federal Mineral Rights and Land

Abstract: We calculate a time series of the value of federal mineral rights in oil and natural gas by using various estimates of proven and unproven reserves and time series on federal government royalties and bonus payments. We also present estimates of the components of the revaluation of this series through time.The results are striking. Federal mineral rights are the single largest item in a complete balance sheet of the federal government, dominating the total value of tangible capital or financial assets. In 1981, for example, we estimate that the value of federal oil and gas rights exceeded $800 billion, which was larger than the privately held national debt. The paper also presents estimates of various confidence bounds on the value of oil and natural gas. The methodology can be extended to other minerals, although we have not done so; our estimate is a lower bound on the total value of all mineral rights.The paper also expands and extends previous estimates of the value of federal land. New data, and attention to the detailed decomposition of federal land holdings by type, lead to substantially larger estimates of the value of federal land than have been presented in previous research. Our estimate is that by 1981, the total value of federal land was $175 billion.