What does a Baa2 credit rating mean? (2024)

What does a Baa2 credit rating mean?

Baa2. The ninth highest rating in Moody's Long-term Corporate Obligation Rating. Obligations rated Baa2 are subject to moderate credit risk. They are considered medium grade and as such may possess certain speculative characteristics. Rating one notch higher is Baa1.

Is Baa2 a good credit rating?

Ba2/BB are ratings below investment grade but are the second-highest rating in the non-investment grade (junk or high-yield) bracket.

What is the meaning of Baa2?

BAA2 or Baa2 may refer to: Backing Australia's Ability, public policy. Moody's Investors Service's credit rating, indicating moderate ability to repay short-term debt.

What does the Moody's BAA rating mean?

Baa Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics. Ba Obligations rated Ba are judged to be speculative and are subject to substantial credit risk.

Is Baa2 considered investment grade?

Investors typically group bond ratings into 2 major categories: Investment-grade refers to bonds rated Baa3/BBB- or better. High-yield (also referred to as "non-investment-grade" or "junk" bonds) pertains to bonds rated Ba1/BB+ and lower.

Is Baa2 rating investment grade?

Investment grade: Aaa, Aa1, Aa2, Aa3, A1, A2, A3, Baa1, Baa2, Baa3 (from highest quality with minimal credit risk to medium grade with moderate credit risk).

What is a Baa1 rating equivalent to?

Although the agencies adopt different rating scales, there is equivalence across the scales which facilitates comparison such that a Baa1 rating (for example) from Moody's is equivalent to a BBB+ rating from S&P and BBB+ from Fitch.

Which is better BB or B+?

BB+ credit rating is a notch above BB, which is a slightly lower credit risk, and BB- credit rating is a notch below BB, and a slightly higher credit risk. Note that BB+, BB and BB- are credit ratings specific to Standard & Poor and Fitch credit agencies.

Is Baa3 an investment grade?

Bonds rated above BBB- (or Baa3 in the Moody's rating scale) are considered investment-grade.

What is the hierarchy of S&P credit ratings?

Investment Grade: AAA, AA, A, BBB (from best quality to good quality but somewhat vulnerable to changing economic conditions). Non-Investment Grade (also referred to as Junk): BB, B, CCC, CC, C (speculative; from the least degree of speculation to the highest degree); D (in payment default).

Is BAA a good rating?

Bonds given the Baa rating are considered as medium-grade obligations, meaning they are neither highly protected nor poorly secured. Bonds rated Baa and above are considered investment grade.

What is a good Moody's rating?

Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk. Obligations rated Aa are judged to be of high quality and are subject to very low credit risk. Obligations rated A are judged to be upper-medium grade and are subject to low credit risk.

What is the difference between Moody's and S&P ratings?

Both ratings are roughly similar, but Moody's uses both letter cases and numbers in its ratings where Standard & Poor's uses all uppercase letters along with plus or minus symbols. The highest tier of ratings identify investment grade bonds, which are very stable investments but offer low performance yields.

What is the best bond rating?

Investment grade bonds are assigned “AAA” to “BBB-" ratings from Standard & Poor's and Fitch, and "Aaa" to "Baa3" ratings from Moody's. Junk bonds have lower ratings. The higher a bond's rating, the lower the interest rate it will carry, due to the lower risk, all else equal.

What is the lowest bond rating?

Bond ratings are expressed as letters ranging from “AAA”, which is the highest grade, to “D”, which is the lowest grade. Different rating services use the same letter grades, but use various combinations of upper- and lower-case letters and modifiers to differentiate themselves.

Is BBB a junk bond?

By Glenn Yago. POST: Junk bonds, also known less pejoratively as high-yield bonds, are bonds that are rated as “speculative” or “below investment” grade issues: below BBB for bonds rated by Moody's and below Baa for bonds rated by Standard and Poor's (the two main debt-rating agencies).

What is the lowest investment grade rating Moody's?

In Moody's Ratings system, securities are assigned a rating from Aaa to C, with Aaa being the highest quality and C the lowest quality. Moody's was founded by John Moody in 1909, to produce manuals of statistics related to stocks and bonds and bond ratings.

What is the lowest investment grade Moody's?

Obligations rated C are the lowest-rated class of bonds and are typical- ly in default, with little prospect for recovery of principal and interest.

Why would someone invest in a bond with a low rating?

An issuer with a high credit rating will pay a lower interest rate than one with a low credit rating. Again, investors who purchase bonds with low credit ratings can potentially earn higher returns, but they must bear the additional risk of default by the bond issuer.

What is the credit rating of bb+ or Ba1?

A Ba1/BB+ rating is below investment grade, or sometimes referred to as high-yield or junk; therefore, the yield on the bond should be higher than on an investment-grade security to compensate for the greater risk of payment default that the bond investor is taking on.

What is a B+ credit rating?

B1/B+ are one of several non-investment grade credit ratings (also known as "junk") that may be assigned to a company, fixed-income security, or floating-rate loan (FRN). These ratings signify that the issuer is relatively risky, with a higher-than-average chance of default.

What is the highest credit rating for S&P?

'AAA' is the highest issuer credit rating assigned by S&P Global Ratings. An obligor rated 'AA' has very strong capacity to meet its financial commitments. It differs from the highest-rated obligors only to a small degree.

What is Boeing's credit rating?

Boeing's 'BBB-' rating and Stable Outlook continue to be supported by the company's over $520 billion backlog (up about 30% during 2023), which provides several years of revenue visibility.

Is BAA an investment grade?

Corporate bonds are rated based on their default probability, health of the corporation's debt structure, as well as the overall health of the economy. The Baa rating is relatively low risk, and is considered investment grade, however it is only one grade above a junk bond rating.

Is it possible to have a credit score of 900?

While older models of credit scores used to go as high as 900, you can no longer achieve a 900 credit score. The highest score you can receive today is 850. Anything above 800 is considered an excellent credit score.