Perspectives · Credit · 2026

What a credit rating tells you, and what it does not

A credit rating is an opinion from a rating agency about how likely a borrower is to repay. Ratings run from the highest, such as AAA, down through investment grade to speculative grade, often called high yield, and then to default.

Ratings are a useful summary, but they are not a guarantee and they can lag events. A downgrade does not always move markets the way you would expect. When Moody's removed the US's last top rating in May 2025, Treasuries remained the market's benchmark safe asset, because the US borrows in its own currency and its debt is the most widely traded in the world.

A rating also does not say anything about price. A bond can be well rated and still be expensive; a lower-rated bond can be cheap for good reasons.

Treat a rating as one input. Read what the borrower owes, what secures the loan, when it is repaid, and what could go wrong.

General information only; not investment advice. Read the risk warning.