Glossary · from the DESK dictionary
Rating
An assessment of an issuer's creditworthiness by rating agencies such as S&P, Moody's, or Fitch.
In plain words
A kind of "grade" for how likely a borrower is to meet its payment obligations.
In more detail
Ratings range from AAA (highest creditworthiness) to D (default), and broadly distinguish between "investment grade" and "high yield" (speculative) creditworthiness — with corresponding effects on required yield.
Example
A bond rated AAA typically pays a lower yield than one rated BB (high yield).
What it means for traders
A central metric in credit investing and for institutional investors' regulatory investment rules.
Common pitfalls
Rating agencies were criticized for their role in the 2008 financial crisis (misjudging structured products).
Related terms
Bond · Audit · Credit Default Swap (CDS) · Cost of Debt · Credit Spread · Debenture · Default Risk
From the DESK dictionary. For information only, not investment advice.
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DESK is a research tool and not investment advice. Page generated: 2026-10-12.