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A bond is considered investment grade or IG if its credit rating is BBB− or higher by Fitch Ratings or S&P, or Baa3 or higher by Moody's, the so-called "Big Three" credit rating agencies. Generally they are bonds that are judged by the rating agency as likely enough to meet payment obligations that banks are allowed to invest in them.
Looking at rated bonds for 1973–89, the authors found a AAA-rated bond paid 43 "basis points" (or 43/100 of a percentage point) over a US Treasury bond (so that it would yield 3.43% if the Treasury yielded 3.00%). A CCC-rated "junk" (or speculative) bond, on the other hand, paid over 7% (724 basis points) more than a Treasury bond on average ...
S&P Global Ratings (previously Standard & Poor's and informally known as S&P) is an American credit rating agency (CRA) and a division of S&P Global that publishes financial research and analysis on stocks, bonds, and commodities.
For S&P, a bond is considered investment grade if its credit rating is BBB− or higher. Bonds rated BB+ and below are considered to be speculative grade, sometimes also referred to as "junk" bonds. An SD rating indicates that the country has selectively defaulted on some outstanding obligations [1] [2]
In August 2011, S&P downgraded the long-held triple-A rating of US securities. [1] On August 1, 2023, Fitch downgraded its credit-rating of United States Treasuries from AAA to AA+, as S&P had twelve years earlier, leaving only Moody's to still assign its highest rating to the country's debt.
Corporate bonds are divided into two main categories High Grade (also called Investment Grade) and High Yield (also called Non-Investment Grade, Speculative Grade, or Junk Bonds) according to their credit rating. [5] Bonds rated AAA, AA, A, and BBB are High Grade, while bonds rated BB and below are High Yield.
A market-implied rating estimates the market observed default probability of an individual, corporation, or even a country. Indeed, a credit rating is simply a probability of default . [ 1 ] The methodology used by Moodys consists in a median piecewise fit of the ratings to the credit defaut swap data observed on the market. [ 2 ]
This is a list of U.S. states by credit rating, showing credit ratings for sovereign bonds as reported by the three major credit rating agencies: Standard & Poor's, Fitch and Moody's. The list is given as of May 2021.