A bond rating is an agency's credit-risk opinion on an issuer or debt obligation, expressed through a scale such as AAA to D or Aaa to C.
A bond rating is a credit-rating agency’s opinion about the credit risk of a bond issuer or a specific debt obligation. Ratings use symbols such as AAA, BBB-, Baa1, or Ba1 to rank relative capacity to meet financial commitments; they are not guarantees, market-price forecasts, or recommendations to buy or sell.
+ and - modifiers; Moody’s uses categories such as Baa and numerical modifiers 1, 2, and 3.BBB- or higher at S&P/Fitch and Baa3 or higher at Moody’s as investment grade.Ba1 is Moody’s highest notch in the Ba speculative-grade category; Baa1 is the highest notch in the Baa investment-grade category.NR or not rated means no rating is shown for the referenced agency and scale. It does not prove either high or low credit quality.This table is a broad orientation, not a substitute for an agency’s current definitions or the rating attached to a specific security.
| Broad credit tier | S&P / Fitch categories | Moody’s categories | Common market label |
|---|---|---|---|
| Highest | AAA | Aaa | Investment grade |
| Very strong / high quality | AA, A | Aa, A | Investment grade |
| Medium grade | BBB | Baa | Investment grade |
| Elevated vulnerability | BB, B | Ba, B | Speculative grade or high yield |
| Very high credit risk | CCC, CC, C | Caa, Ca, C | Speculative or distressed |
| Default categories | Agency-specific symbols | Agency-specific symbols | Default status depends on the agency definition |
Within a category, modifiers rank relative standing. S&P and Fitch use BBB+, BBB, and BBB-; Moody’s uses Baa1, Baa2, and Baa3. These systems are comparable only at a broad level because methodologies and default definitions are not identical.
| Term | Practical meaning |
|---|---|
| Rated | A referenced agency has assigned a rating to the issuer or obligation |
Not rated (NR) | No rating is displayed for that agency and scale; the reason requires investigation |
AAA | Highest long-term category on S&P and Fitch global scales |
BBB | Lowest broad S&P/Fitch investment-grade category; BBB- is the common boundary notch |
Baa1 | Highest Moody’s notch within the Baa investment-grade category |
Ba1 | Highest Moody’s notch within the Ba speculative-grade category |
| Downgrade | A rating is lowered because the agency now views credit risk as higher |
| Fallen angel | A bond that moves from investment grade to speculative grade after a downgrade |
A downgrade can affect yield spreads, price, collateral rules, index membership, and mandate eligibility. The effect is not automatic or uniform: markets may anticipate the action, and different investors can face different constraints.
Suppose a company has a general issuer rating of BBB. Its senior secured bond might receive a different issue rating from its subordinated bond because the claims have different collateral, priority, and expected recovery. Tie every symbol to the exact issuer, obligation, agency, scale, and date.
A portfolio’s weighted average credit rating is a separate measure. It converts holdings’ ratings into a summary under a stated methodology and can conceal concentration, unrated positions, nonlinear default risk, and differences between agencies.
A split rating occurs when agencies assign different grades to the same issuer or obligation. Suppose a bond is rated BBB- by S&P, BB+ by Fitch, and Baa3 by Moody’s. Two opinions are investment grade and one is speculative grade, but that observation alone does not determine the bond’s treatment.
A mandate might use:
The same bond can therefore qualify as investment grade under one documented rule and high yield under another. Analysts should name the source, policy, and calculation date instead of stating a single grade without context.
Rating status also needs context. An outlook describes a medium-term direction or balance of risks under an agency’s definitions, while a credit watch typically flags a nearer-term review. Neither is a promised rating action.
Ratings can influence required yield, credit spread, mandate or index eligibility, collateral treatment, monitoring, and market reaction to rating actions. They do not directly measure interest-rate risk, liquidity, market volatility, call risk, currency risk, tax treatment, or whether a price adequately compensates for risk.
NR means safe or unsafe without identifying why no rating is shown.Use the agencies’ current definitions for exact symbols: S&P Global’s guide, Moody’s explanation, and Fitch’s rating definitions. The SEC’s Investor.gov credit-ratings bulletin explains why ratings should supplement rather than replace independent analysis.
This page is educational only. It does not provide a rating, credit opinion, or recommendation concerning any issuer or security.
BBB- for S&P and Fitch and Baa3 for Moody’s as the lowest investment-grade long-term rating. Always check the agency, scale, and current methodology.BBB is an investment-grade category, not a guarantee. The bond can still lose value or default and remains exposed to credit, interest-rate, liquidity, call, and market risks.