Credit Rating

An agency assessment of a borrower ability to repay debt.

Credit ratings are issued by agencies like Moody, S&P, and Fitch. Investment-grade bonds rated BBB minus and above are considered low default risk. Below that are high-yield or junk bonds. Ratings directly affect borrowing costs: lower ratings mean higher interest rates demanded by investors.

After the downgrade to a lower credit rating, the company had to offer higher interest to attract lenders.