What Are Bond Ratings? - TheStreet Definition

Dictionary of Financial Terms

A bond's rating evaluates the issuer's ability and willingness to make all payments in full and on time. The highest rating a bond can receive is triple-A. The higher an issuer's rating, the lower the interest rate it can obtain.

The leading bond rating agencies are Moody's Investors Service and Standard & Poor's.

Ratings are assigned when bonds are first issued, and reviewed on a regular basis. If a rating agency concludes that an issuer's creditworthiness has improved, it may upgrade the bonds. Conversely, if it concludes that an issuer's creditworthiness has deteriorated, it may downgrade.

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