Investing in Bonds

Credit Ratings


When an investor invests their money with bonds, the greatest fear is that they won’t get their money back and that the organization will default on their bond payments.


If a company defaults on a bond, there is a chance that the investor will not get their money back. As a result, a credit rating system was developed to inform investors on how secure certain bonds are.


The lowest rated bonds are called junk bonds and they have a rating of BB and below. Junk bonds are high risks bonds that have very high interests rates (i.e. Turkey issued 20% government bonds in 2017).


AAA bonds are the safest and usually have lower interest rates. Following that are AA and A bonds, which are considered to be a little riskier than AAA bonds. BBB-rated bonds are medium-risk bonds.

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