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AA (credit rating)

An AA credit rating is high, signifying a very low credit risk and a powerful capacity to meet financial commitments. It is just below the highest rating (AAA), indicating a slightly higher risk but still considered a high-quality credit.

Example

A government bond with an AA rating is considered a safe investment. While it may offer slightly higher returns than AAA-rated bonds, the risk of default remains minimal.

Key points

• Denotes very high creditworthiness and a low risk of default.

• Slightly lower than AAA but still considered a high-quality investment.

• Typically associated with entities that are highly stable financially.

Quick Answers to Curious Questions

Advantages include slightly higher yields due to marginally higher risk. The disadvantage is that AA-rated bonds are considered somewhat riskier than AAA, though the risk is still very low.

An AA rating allows a company to raise capital relatively quickly and at favorable interest rates, which indicates high creditworthiness. However, it might not be as advantageous as an AAA rating.

Factors include economic downturns, industry-specific risks, changes in government policy, or significant negative events affecting the company.