About Bond Ratings

There are three companies that assign a rating to virtually every bond issued in the United States:

• Standard & Poor's
• Moody's
• Fitch

These ratings are a key part of the way the bond market functions.

The ratings serve two functions. First, they help investors make a decision about the quality of the bond (i.e. the likelihood of the issuer defaulting on the bond). Second, the ratings are used to classify every bond into one of two categories: "investment grade" bonds, or "high yield" bonds. These two bond categories are widely used to build portfolios, with every investor deciding how much of their portfolio to allocate to investment grade versus high yield bonds. High yield bonds are sometimes referred to as "junk bonds".

Unfortunately, the three companies don't use the same ratings system. But the rating systems are close enough to be workable:

Investment grade	Moody's	Standard & Poor's	Fitch
	Aaa	AAA	AAA
	Aa1	AA+	AA+
	Aa2	AA	AA
	Aa3	AA-	AA-
	A1	A+	A+
	A2	A	A
	A3	A-	A-
	Baa1	BBB+	BBB+
	Baa2	BBB	BBB
	Baa3	BBB-	BBB-

High yield	Moody's	Standard & Poor's	Fitch
	Ba1	BB+	BB+
	Ba2	BB	BB
	Ba3	BB-	BB-
	B1	B+	B+
	B2	B	B
	B3	B-	B-
	Caa1	CCC+	CCC+
	Caa2	CCC	CCC
	Caa3	CCC-	CCC-
	Ca	CC	CC
	C	C	C
		D	D

All data is a live query from our database. The wording was last updated: 12/19/2018.