Rating

A rating is an assessment of the creditworthiness or financial strength of a borrower, typically assigned by credit rating agencies such as Moody’s, Standard & Poor’s, or Fitch. Ratings range from high-grade (AAA) to speculative (junk), providing investors with insight into the likelihood that a borrower will meet its debt obligations. Ratings are used for government bonds, corporate bonds, and other debt instruments, influencing the interest rates borrowers must pay and the investment risk for lenders.

Example

A corporate bond rated AAA by a credit rating agency indicates a very low risk of default, while a bond rated BB is considered speculative and riskier.