What is 'Aa2'

Aa2 is the third highest credit rating that ratings agency Moody’s assigns to fixed income securities like bonds. The higher the rating, the more likely the issuer is to meet its financial commitments and the lower the risk of default.

BREAKING DOWN 'Aa2'

The credit ratings assigned by the various ratings agencies, like Standard & Poors, Moody’s and Fitch, measure the probability that the borrower will default. They are based primarily upon the insurer's or issuer's creditworthiness.

Moody's ratings, for example, start Aaa for prime bond issuers with the lowest risk down to C, which is usually given to securities that are in default with little chance of the principal or interest being repaid.

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