What does the credit rating for bonds mean?
The credit rating of a bond is an indication of the bond issuer’s credit quality, as evaluated by Standard & Poors, Moody’s, or Fitch. The rating implies the issuer’s risk of default—the higher the bond rating, the smaller the risk of default (AAA is the highest rating). Bonds with a rating of BBB- (Baa3 for Moody’s) and above are considered investment grade. Bonds with a rating of BB+ (Ba1) and below are considered “junk bonds” and carry more risk.
