What is a bonds credit rating?
Each bond has a credit rating that can be used to determine the financial strength and risks of the issuer of the bond (company or government). There are three main credit rating agencies:
Bond ratings are separated into investment grade and non-investment grade. It’s practically the same as secured vs unsecured bonds. Non-investment grade bonds are very risky and are more prone to default (the issuer has trouble paying their debts) before hitting maturity. An overview of ratings:
Bonds with a very low rating are called speculative or “high yield” bonds. Be very careful when buying bonds with weak ratings.
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Chapters: The Ultimate Investing Guide
- 1. Intro2. What is investing?3. What are stocks?4. Types of stocks5. Why buy stocks?6. How to buy stocks7. Store stocks8. Stock splits9. Stock quests10. What are bonds?11. Secured bonds and maturity12. How do bonds work?13. Credit rating14. Treasury bonds15. Corporate bonds16. Municipal bonds17. Agency bonds18. Bond quests19. Mutual funds20. Mutual funds earnings21. ETFs22. Why ETFs23. Index funds24. Hedge funds25. Derivatives26. Commodities27. Indices28. Overview29. Determine company value30. IPOs31. Penny stocks32. Dividends33. Financial health34. Profitability35. Operating efficiency36. Liquidity37. Solvency38. Market Evaluation39. Not only numbers40. Investing portfolio considerations41. Creating portfolio42. Buy/Sell Strategy43. Broker44. Emotions45. Final steps46. Key Concepts