Bond ratings

Bond ratings are assessments of a borrower's creditworthiness, indicating how likely they are to pay back the bond's principal and interest. Rating agencies like Moody’s, S&P, and Fitch evaluate factors such as financial stability and economic environment, assigning ratings from high (e.g., AAA) to lower grades (e.g., junk bonds). Higher-rated bonds are considered safer but offer lower returns, while lower-rated bonds carry more risk but may offer higher yields. These ratings help investors gauge the level of risk involved and make informed investment decisions.