Corporate Bond Ratings

November 12th, 2006

The basis for determining the creditworthiness of Corporate Bonds relies on a corporate bond issuer ’s ability to make timely payments of interest and principal to corporate bond holders.

Two recognized agencies that assign Corporate Bonds credit ratings (or just corporate bond ratings) to corporate issues are Moody’s Investors Service (Moody’s Ratings) and Standard & Poor’s (or S&P ratings).

The Corporate Bonds table below provides the investment grade corporate bond ratings and high yield corporate bond ratings levels of Moody’s ratings and S&P ratings.

Corporate Bond Ratings for investment grade Corporate Bonds:

Corporate bond ratings / Quality	Moody’s ratings	S&P ratings
High Grade Corporate Bonds	Aaa	AAA
	Aa1	AA+
	Aa2	AA
	Aa2	AA-
Upper Medium Grade Corporate Bonds	A1	A+
	A2	A
	A3	A-
Medium Grade Corporate Bonds	Baa1	BBB+
	Baa2	BBB
	Baa3	BBB-

High Yield Corporate bond ratings

Corporate bond ratings / Quality	Moody’s ratings	S&P ratings
Speculative Grade Corporate Bonds	Ba1	BB+
	Ba2	BB
	Ba3	BB-
	B1	B+
	B2	B
	B3	B-
Highly Speculative Corporate Bonds	Caa	CCC+
	Ca	CCC
	C	CCC-
		CC
		C
Default Corporate Bonds	D	D

In their corporate bond ratings analysis, Moody’s and S&P focus primarily on a corporate bond company’s overall financial condition as well as the industry the issuer represents.

Corporate bond ratings on individual Corporate Bonds issues are constantly being revised in light of industry and company changes, which can have a distinct effect on an issue ’s market price.

Corporate Bonds