Credit Rating

A credit rating is a letter-grade assessment, issued by agencies like S&P, Moody's, and Fitch, of how likely a borrower is to repay its debt in full and on time. Ratings run from AAA (the highest quality) down through the investment-grade tiers to speculative, junk-rated tiers.

A rating change can move a bond's price and a company's borrowing costs immediately, since many large investors are contractually restricted to certain rating thresholds, which means a single downgrade can trigger forced selling independent of any change in the company's actual cash flows.