Credit Rating

There are a handful of major credit rating agencies (e.g. Moody’s and Standard & Poor’s) which assess  the ability of a country or company to pay back its debt. The best rating is AAA; anything at or above BBB- is referred to as “investment grade”. Many investment firms promise their own investors that they won’t buy the debt of companies (i.e. bonds) ranked below investment grade, hence it’s an important classification that companies often seek to maintain. Anything below investment grade is termed “high-yield” or “junk”.