InvestorQ : Is it safer to invest in "A" rated bonds?
Samita Patil made post

Is it safer to invest in "A" rated bonds?

Manisha Mehta answered.
1 year ago
In investment, there is a thing called bond rating. This represents the creditworthiness of government or corporate bonds. The bond’s ratings are published by the credit rating agencies and are used to assess the likelihood of debt repayment. There are two credit rating agencies one is Moody’s that give credit rating of Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C. While the Standard and Poor’s Fitch assign bond credit ratings of AAA, AA, A, BBB, B, CCC, C, and D.

So, these ratings are based on an analysis of bonds done by experts regarding the debt repayment power. Bonds with AAA ratings are considered to be the least risky. Whereas that rated AA and A are moderately risky. So, you can invest in A-rated bonds if you are willing to bear moderate risk.

As per the rating agencies, these companies have a strong capacity to meet their financial liabilities but are prone to the adverse effects of any changes in economic conditions and circumstances.