Terms of Use

The credit rating for a bond reflects the degree of risk associated with the bond issuer defaulting on the loan.

There are several rating agencies that rate bond issuers. Credit ratings are based on in-depth analysis of the issuer's financial condition and management, economic and debt characteristics, and the specific revenue sources securing the bond.

The highest ratings are AAA (S&P and Fitch) and Aaa (Moody's). Bonds rated in the BBB category or higher are considered investment-grade; securities with ratings in the BB category and below are considered "high yield" or below investment-grade.

As is the case with all investments, the higher the risk you assume, the higher the rate.

Credit Rating Agency

Credit Risk Moody's Standard & Poor's Fitch

Credit Rating

Highest quality Aaa AAA AAA
High quality (very strong) Aa AA AA
Upper medium grade (strong) A A A
Medium grade Baa BBB BBB
Somewhat speculative Ba BB BB
Speculative B B B
Highly speculative Caa CCC CCC
Most speculative Ca CC CC
Imminent default C C C
Default C D D

You can see bond ratings by going to CreditWatch (S&P), Under Review (Moody's), or Rating Watch (Fitch). The rating agencies make their ratings available to the public through their ratings online or through their information desks. In addition, their published reports and ratings are available in many local libraries.