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.
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