Bond rating

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In investment, the bond credit rating assesses the credit worthiness of a corporation's debt issues. It is analogous to credit ratings for individuals and countries. The credit rating is a financial indicator to potential investors of debt securities such as bonds. These are assigned by credit rating agencies such as Moody's, Standard & Poor's, and Fitch have letter designations such as AAA, B, CC.

Moody's		S&P		Fitch
Long Term	Short Term	Long Term	Short Term	Long Term	Short Term
Aaa	P-1	AAA	A-1+	AAA	A1+	Prime
Aa1		AA+		AA+		High grade
Aa2		AA		AA
Aa3		AA-		AA-
A1		A+	A-1	AA+	A1	Upper medium grade
A2		A	A-1	A	A1
A3	P-2	A-	A-2	A-	A2
Baa1	P-2	BBB+	A-2	BBB+	A2	Lower medium grade
Baa2	P-3	BBB	A-3	BBB	A3
Baa3	P-3	BBB-	A-3	BBB-	A3
Ba1	Not Prime	BB+	B	BB+	B	Non Investment grade speculative
Ba2		BB		BB
Ba3		BB-		BB-
B1		B+		B+		Highly Speculative
B2		B		B
B3		B-		B-
Caa		CCC+	C	CCC	C	Substantial risks
Ca		CCC				Extemely speculative
C		CCC-				In default with little prospect for recovery
/		D	/	DDD	/	In default
/				DD
/				D

1 Credit Rating Agencies
2 Credit Rating Tiers
3 Municipal Bonds
4 See also
5 References
6 External links

Credit Rating Agencies

See also Credit Rating Agency

In the United States of America, there are seven rating agencies that have received the Nationally Recognized Statistical Rating Organization (NRSRO) designation, and are overseen by the SEC in their assignment of credit ratings: Standard & Poor's (S&P), Moody's, Fitch, A. M. Best, Japan Credit Rating Agency, Ltd., Ratings and Investment Information, Inc. and Dominion Bond Rating Service. S&P, Moody's, and Fitch are far larger than Japan CRA, R&I, A.M. Best and Dominion, and dominate the market with approximately 90-95 percent of world market share.

Credit Rating Tiers

Moody's assigns bond credit ratings of Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C, . Standard & Poor's and Fitch assign bond credit ratings of AAA, AA, A, BBB, BB, B, CCC, CC, C, D.

Moody's, S&P and Fitch will all also assign intermediate ratings at levels between AA and B (e.g., BBB+, BBB and BBB-), and may also choose to offer guidance (termed a "credit watch") as to whether it is likely to be upgraded (positive), downgraded (negative) or uncertain (neutral).

Moody's	Standard & Poor's	Credit worthiness
Aaa	AAA	Triple A = Credit risk almost zero
Aa1	AA+	Safe investment, low risk of failure
Aa2	AA	"
Aa3	AA-	"
A1	A+	Safe investment, unless unforeseen events should occur in the economy at large or in that particular field of business
A2	A	"
A3	A-	"
Baa1	BBB+	Medium safe investment. Occurs often when economy has deteriorated. Problems may arise
Baa2	BBB	"
Baa3	BBB-	"
Ba1	BB+	Speculative investment. Occurs often in deteriorated circumstances, usually problematic to predict future development
Ba2	BB	"
Ba3	BB-	"
B1	B+	Speculative investment. Deteriorating situation expected
B2	B	"
B3	B-	"
Caa	CCC	High likelihood of bankruptcy or other business interruption
Ca	CC	"
C	C	"
	D	Bankruptcy or lasting inability to make payments most likely

Municipal Bonds

Municipal bonds, instruments issued by local, state, or federal governments in the United States, have a separate naming/classification system which mirrors the tiers for corporate debt.^[1]