ABC's of Bond Ratings

Investment Strategy

ABC's of Bond Ratings

Investors considering lower rated bonds may find higher yields – along with higher risks.

March 23, 2015

Bonds usually are rated on an alphabetical scale that seeks to measure the likelihood of an issuer being able to make the payments on the bond. They are not a guarantee, and bonds sold prior to maturity are subject to gain or loss depending on the market price at the time of sale. The table below shows commonly assigned credit ratings and what they mean.

Although they can assist investors in evaluating the creditworthiness of an issuer, ratings are not recommendations to buy, sell or hold a security, nor do ratings remove market risk. In addition, ratings are subject to review, revision, suspension, reduction or withdrawal at any time, and any of these changes in ratings may affect the current market value of your investment.

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