Bond Rating
What is it? A letter grade from a rating agency indicating the risk of default on municipal or corporate bonds. Rating agencies, such as Moody?s and Standard & Poor?s, assign a rating when a bond is issued. They continue to monitor the bond and will change the rating if the issuer?s financial condition changes. The highest rating is AAA (Aaa for Moody?s). Bonds rated BBB (or Baa) and above are considered investment grade. Anything below is considered junk, which typically carries a higher interest rate to compensate for risk. Bonds with a D rating (C for Moody?s) are in default.Added By: Leah
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