Source: Investopedia
Before you decide whether to invest into a debt security from a company or foreign country, you must determine whether the prospective entity will be able to meet its obligations. A ratings company can help you do this. Providing independent objective assessments of the credit worthiness of companies and countries, a credit ratings company helps investors decide how risky it is to invest money in a certain country and/or security.
There are three top agencies that deal in credit ratings for the investment world. These are: Moody's, Standard and Poor's (S&P's) and Fitch IBCA. The ratings lie on a spectrum ranging between highest credit quality on one end and default or "junk" on the other. Long–term credit ratings are denoted with a letter: a triple A (AAA) is the highest credit quality, and C or D (depending on the agency issuing the rating) is the lowest or junk quality.
| Bond Rating | Grade | Risk | |
| Moody's | Standard & Poor's | ||
| Aaa | AAA | Investment | Lowest Risk |
| Aa | AA | Investment | Low Risk |
| A | A | Investment | Low Risk |
| Baa | BBB | Investment | Medium Risk |
| Ba, B | BB, B | Junk | High Risk |
| Caa/Ca/C | CCC/CC/C | Junk | Highest Risk |
| C | D | Junk | In Default |
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