Credit ratings | TradeLiga

The lesson in full

Before lending to a country or a company, investors ask one question: will we get paid back? Credit ratings give a quick answer, and they shape what borrowers pay.
The big three agencies are S&P Global, Moody's and Fitch. Grades run from AAA (safest) to D (in default). BBB- and above (Baa3 at Moody's) is investment grade; below is high yield, or "junk".
Lower rating, more risk, higher yield. Lenders want extra interest from riskier borrowers, so a downgrade usually makes borrowing more expensive.
In May 2017, S&P raised Indonesia to BBB-, investment grade. More global funds could then buy its government bonds, which can help lower its borrowing costs.
Even the US lost its top grade: S&P cut it to AA+ in August 2011, Fitch did the same in August 2023 and Moody's cut it to Aa1 in May 2025.
Common mistake
Myth: "AAA means no risk." Before 2008, many mortgage bonds were rated AAA, then crashed in value when US home prices fell. Ratings are opinions, and they can be wrong.
Key takeaway
A credit rating is an opinion on repayment risk. Lower rating, higher interest. Useful, but never a guarantee.

The top credit rating is... AAAAAA is the highest grade. D means the borrower is already in default.
Bonds rated below BBB- are called... High yield or junkBBB- (Baa3 at Moody's) is the lowest investment grade. Anything below is high yield, also called junk.
A lower rating usually means... Paying a higher interest rateRiskier borrowers must offer more interest to persuade lenders to take the risk.
What did S&P, Fitch and Moody's each do to the US rating between 2011 and 2025? Cut it below AAAS&P in 2011, Fitch in 2023 and Moody's in 2025 each moved the US one step below their top grade.