What is Credit Rating?
Credit ratings assess the likelihood that a bond issuer will repay its debt obligations — assigned by agencies like CRISIL, ICRA, CARE in India and S&P, Moody's globally.
Formula
Scale: AAA (highest safety) → AA → A → BBB → BB → B → C → D (default)
How to Interpret
Investment grade = BBB- and above. Below that = high yield (junk). Rating downgrades can trigger sharp bond price declines.
Typical Ranges
Invest in AAA-AA rated bonds for safety. BBB and below carry significant default risk.