Bond Ratings
26/01/2021Bond ratings are representations of the creditworthiness of corporate or government bonds. The ratings are published by credit rating agencies and provide evaluations of a bond issuer’s financial strength and capacity to repay the bond’s principal and interest according to the contract.
| Investment grade | Moody’s | Standard & Poor’s | Fitch |
| Strongest | Aaa | AAA | AAA |
| Aa1 | AA+ | AA+ | |
| Aa2 | AA | AA | |
| Aa3 | AA- | AA- | |
| A1 | A+ | A+ | |
| A2 | A | A | |
| A3 | A- | A- | |
| Baa1 | BBB+ | BBB+ | |
| Baa2 | BBB | BBB | |
| Baa3 | BBB- | BBB- |
| Non-investment-grade | Moody’s | Standard & Poor’s | Fitch |
| Ba1 | BB+ | BB+ | |
| Ba2 | BB | BB | |
| Ba3 | BB- | BB- | |
| B1 | B+ | B+ | |
| B2 | B | B | |
| B3 | B- | B- | |
| Caa1 | CCC+ | CCC+ | |
| Caa2 | CCC | CCC | |
| Caa3 | CCC- | CCC- | |
| Ca | CC | CC |
| Weakest | Moody’s | Standard & Poor’s | Fitch |
| C | C | C | |
| D | D |
Investment grade and high yield bonds
Investors typically group bond ratings into 2 major categories:
- Investment-grade refers to bonds rated Baa3/BBB- or better.
- High-yield (also referred to as “non-investment-grade” or “junk” bonds) pertains to bonds rated Ba1/BB+ and lower.