Credit Rating

Three firms dominate global credit ratings: Moody's, S&P Global Ratings, and Fitch. Each uses a letter-scale that runs from the highest quality down to what markets call junk — bonds considered speculative or high-risk. S&P and Fitch use AAA at the top, then AA, A, BBB, BB, B, CCC, CC, C, and D (default). Moody's uses a parallel system with slightly different notation (Aaa, Aa, A, Baa, Ba, B, and so on). Pluses, minuses, or numbers refine each grade. The dividing line between investment grade and speculative grade sits between BBB−/Baa3 and BB+/Ba1.

Ratings matter enormously because many large institutional investors — pension funds, insurance companies — are legally or contractually required to hold only investment-grade debt. When an agency downgrades a bond from investment grade to below investment grade, forced selling can follow. That transition is sometimes called "fallen angel" status and can cause sharp moves in a bond's credit spread.

A common confusion: ratings are opinions, not guarantees, and they can lag behind market developments. During the 2008 financial crisis, highly rated structured products lost value rapidly despite their top-tier ratings, prompting widespread debate about the role and reliability of rating agencies. Markets often price in credit deterioration through widening spreads well before a formal rating downgrade arrives. Current government bond data across rated countries is available on the bonds page.