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A public debt rating influences the yield that must be offered to sell the debt instrument. Suppose that a company has information that is favourable in borrowing but confidential. It would disclose the confidential information to the rating agency on the condition that its confidentiality is maintained. The rating agency can work as an intermediary that will close the information gap between the company and public investors. A rating agency with credibility may help a company to get low cost financing. WH As a debt rating can be used as a mechanism to monitor management performance, corporate managers may not want debt rating. As the downgrades of debt rating are greeted with drops in both bond and stock prices, both debt holders and shareholders will question corporate managers' performance in cases of downgrades. The cost of a debt rating may outweigh the perceived benefit.