What is a Rating Agency?
A ratings agency is a firm that attempts to provide a rating for the credit-worthiness of a corporation, government or bond. The more likely the borrower is to repay, the higher credit rating they receive.
The 3 largest credit ratings agencies in the world are:
- Standard & Poors
Typically, anything assigned a rating of AAA, AA, A or BBB is deemed to be of investment grade whilst anything below is junk (i.e. very risky and unlikely to pay off).