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credit rating

There are a handful of major “credit rating agencies” (e.g. Moody’s and S&P) who rate the ability of a country or company to pay back its debt. The best rating is AAA; anything at or above BBB- is referred to as “investment grade.” Many investors aren’t allowed to buy the debt of companies (e.g. bonds) ranked below “investment grade” and hence that is an important classification that companies often seek to maintain. Anything below “investment grade” is termed “high-yield” or “junk”.

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