Qualitative evaluation of a corporate or municipal bond. Indicates the likelihood of paying the investor the promised interest payments and the principal. Bonds are rated by bond rating agencies, such as Moody`s Investors Service and Standard & Poor`s Corporation (S&P). S&P, for example, uses a scale from AAA (highest quality) to D.
Various alphabetical and numerical designations used by institutional investors, Wall Street underwriters, and commercial rating companies to give relative indications of bond and note creditworthiness. Standard & Poor's and Fitch Investors Service Inc. use the same system, starting with their highest rating of AAA, AA, A, BBB, BB, B, CCC, CC, C, and D for default. Moody's Investors Services uses Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C, and D . Each of the services use + or - or +1 to indicate half steps in between. The top four grades are considered Investment Grade Ratings.