Understanding Credit Risk for Corporate Bonds

 

 

Credit Ratings

A bond issuer?s ability to pay its debts that is, make all interest and principal payments in full and on schedule is a critical concern for investors. Most corporate bonds are evaluated for credit quality by Standard & Poor?s, Moody?s Investors Service and Fitch Ratings. Checking a bond?s rating before buying is not only smart but also simple: Just ask your Financial Consultant.

Bonds rated BBB or higher by Standard & Poor?s and Fitch Ratings, and Baa or higher by Moody?s, are widely considered ?investment grade.? This means the quality of the securities is high enough for a prudent investor to purchase them.

 

 

 

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