Credit Rating
Definition
An assessment of the creditworthiness of a borrower, rated by agencies like Moody's, S&P, and Fitch on a letter scale.
Explanation
Investment grade ratings (BBB-/Baa3 and above) indicate low default risk. High yield (BB+/Ba1 and below, aka 'junk bonds') indicate elevated risk and offer higher yields as compensation. The rating scale: AAA (highest quality), AA, A, BBB (investment grade floor), BB, B, CCC, CC, C, D (default). Downgrades from investment grade to high yield ('fallen angels') trigger forced selling by institutional investors who can only hold investment-grade bonds, creating price dislocations that value investors can exploit.
How Stoquity Uses This
Stoquity incorporates credit rating analysis across its portfolio management platform, providing real-time monitoring and AI-powered insights for every portfolio.