INTM524040 | Thin capitalisation: practical guidance: the use of credit ratings: investment grade and non-investment grade credit ratings
From HM Revenue & Customs · International Manual
Range of credit ratings
As is evident from the table below, the credit ratings of two of the ratings agencies have a wide range. The rating agencies distinguish between investment grade and non-investment grade ratings.
Investment Grade (Prime)
| Standard and Poor’s | Moody’s | Note |
|---|---|---|
| AAA (Superior) | Aaa (Exceptional) | The highest debt rating assigned. The borrower’s capacity to repay debt is extremely strong under a variety of economic conditions. |
| AA+ | Aa1 | - |
| AA (Excellent) | Aa2 | The capacity of the borrower to repay debt is very strong under a variety of economic conditions. |
| AA- | Aa3 | - |
| A+ | A1 | - |
| A (Good) | A2 | The borrower has strong capacity to repay debt but is susceptible to adverse effects of changes in circumstances and economic operations. |
| A- | A3 | - |
| BBB+ | Baa1 | - |
| BBB (Adequate) | Baa2 | The borrower has adequate capacity to repay debt but adverse economic conditions or circumstances are likely to lead to risk of default. |
| BBB- | Baa3 | - |
Non-Investment grade (non-prime or speculative grade; also “junk bonds”)
| Standard and Poor’s | Moody’s | Note |
|---|---|---|
| BB+ | Ba1 | Regarded as predominantly speculative, BB+ being the least speculative and C the most. |
| BB (May be adequate) | Ba2 | Regarded as predominantly speculative, BB+ being the least speculative and C the most. |
| BB- | Ba3 | Regarded as predominantly speculative, BB+ being the least speculative and C the most. |
| B+ | B1 | Regarded as predominantly speculative, BB+ being the least speculative and C the most. |
| B (Vulnerable) | B2 | Regarded as predominantly speculative, BB+ being the least speculative and C the most. |
| B- | B3 | Regarded as predominantly speculative, BB+ being the least speculative and C the most. |
| CCC (Extremely vulnerable) | Caa | Regarded as predominantly speculative, BB+ being the least speculative and C the most. |
| CC | Ca | Regarded as predominantly speculative, BB+ being the least speculative and C the most. |
| C | C | Regarded as predominantly speculative, BB+ being the least speculative and C the most. |
| D | - | In default or with payments in arrears. |
| NR (Not rated: S&P has not been requested to rate the borrower’s capacity to meet obligations.) | - | - |