Bond Rating
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Definition of 'Bond Rating'A grade given to bonds that indicates their credit quality. Private independent rating services such as Standard & Poor's, Moody's and Fitch provide these evaluations of a bond issuer's financial strength, or its the ability to pay a bond's principal and interest in a timely fashion. |
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Investopedia explains 'Bond Rating'Bond ratings are expressed as letters ranging from 'AAA', which is the highest grade, to 'C' ("junk"), which is the lowest grade. Different rating services use the same letter grades, but use various combinations of upper- and lower-case letters to differentiate themselves.To illustrate the bond ratings and their meaning, we'll use the Standard & Poor's format: AAA and AA:High credit-quality investment grade AA and BBB:Medium credit-quality investment grade BB, B, CCC, CC, C: Low credit-quality (non-investment grade), or "junk bonds" D: Bonds in default for non-payment of principal and/or interest |
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