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A (credit rating)

A credit rating is assigned by credit rating agencies such as Standard & Poor's, Moody's, or Fitch. The "A" rating indicates a relatively low credit risk and a strong capacity to meet financial commitments, though it is more susceptible to adverse economic conditions than higher ratings.

Example

A company with an A credit rating is considered a safe investment, though not as secure as those rated AA or AAA. Investors might expect a moderate return with relatively low risk when investing in bonds issued by such a company.

Key points

• Indicates a solid ability to meet financial obligations.

• Represents a lower risk than lower-rated bonds (e.g., BBB, BB).

• Susceptible to economic fluctuations.

Quick Answers to Curious Questions

An A credit rating generally allows a company to issue bonds at lower interest rates than lower-rated bonds (e.g., BBB), as the perceived risk of default is lower. However, due to the slightly increased risk, the rates will be slightly higher than those for AA or AAA bonds.

Investors might choose A-rated bonds for their slightly higher yields than AAA-rated ones, as they are willing to take on a bit more risk for a better return.