Think of a bond rating as a school report card. Companies have ranking for bonds based on the likelihood of the bond defaulting on its invested amount
Now that we’ve tackled bond premiums, it’s time you learn about bond ratings and why they are so important to understand.
What is a bond rating?
Think of a bond rating like a report card for the bond market. Schools give letter grades to students. They are based on the likelihood of the bond defaulting on its invested amount. Investment companies generally require bond issuers to have at least two ratings from those and other rating companies.
The rating companies examine and weigh the investment risk of a bond. The ratings can be thought of as risk assessments and are judgments on the credit strength of the companies and their risk for defaulting — not paying — on their debt obligations.
Investors can look at the rating for a particular bond and see if the investment would be low risk — bonds with a higher rating, or higher risk — bonds that have lower ratings.
The ratings systems are based on a letter grading system, A through D, with the AAA being the highest level a bond issuer can achieve.
The S&P’s bond ranking uses the following ratings, so let’s use this as an example:
AAA and AA Bond Rating
If a bond has these ratings, the investor can be assured that it is a high credit-quality investment grade.
<h2″>AA and BBB Bond Rating
While not as secure as the higher levels, bonds with these ratings are considered medium credit-quality investment grade.
BB, B, CCC, CC and C Bond Rating
Bonds with these ratings are low quality grade bonds, also known as junk bonds or non-investment grade bonds.
D Bond Rating
Bonds that have this rating are already in default for non-payment of principal and/or interest.
Impact of Bond Ratings
Financial analysts say the rating of a bond affects a company’s ability to secure lucrative interest rates for its debt and the amount of funds a company can go after — which could impact bond price.
In general, a bond with a higher chance of default — with the investor being out of money — would be lower priced than a secure AAA investment with a low chance of default.
Other financial experts point out that these ratings are mere opinion and not an accurate judge of a bond’s worth or the company’s ability to pay back its investors.
Bond Rating Agencies
Every 6-12 months, rating agencies review bond ratings. A bond may be reviewed at any time the agency deems necessary, though. Reasons for this are missed or delayed payments to investors, issuance of new bonds, changes to an issuer’s underlying financial fundamentals, or other broad economic developments.
Institutional and individual investors rely on bond rating agencies and their in-depth research to make investment decisions. Rating agencies play an important role in the investment process and can make or break a company’s success.
Bond Rating Tips
While the rating agencies provide a robust service and are worth the fees they earn, the value of such ratings has been widely questioned since the 2008 financial crisis, and the agencies’ timing and opinions have been criticized when dramatic downgrades have come very quickly.
Investors should not rely solely on the bond rating agency’s rating and should supplement the ratings with their own research. It’s also important to frequently review the ratings over the life of a bond.
Curious about bonds and their ratings? Check out this course on Investing In Different Markets.
Ranking of Top Stock Newsletters Based on Last 3 Years of Stock Picks as of December 27, 2025
We are paid subscribers to dozens of stock and option newsletters. We actively track every recommendation from all of these services, calculate performance, and share our results of the top performing stock newsletters whose subscriptions fees are under $500. The main metric to look for is "Return vs S&P500" which is their return above that of the S&P500. So, based on December 27, 2025 prices:
Best Stock Newsletters Last 3 Years' Performance
| Rank | Stock Newsletter | Picks Return | Return vs S&P500 | Picks w Profit | Max % Return | Current Promotion |
|---|---|---|---|---|---|---|
| 1. |  Alpha Picks | 82% | 56% | 76% | 1,583% | January Promotion: Save $50 |
| Summary: 2 picks per month based on Seeking Alpha's Quant Rating; consistently beating the market every year since launch; tells you when to sell and they have sold almost half. See complete details in our Alpha Picks Review. | ||||||
| 2. |  Zacks Value Investor | 60% | 40% | 54% | 692% | January Promotion: $1, then $495/yr |
| Summary: 10 stock picks per year on January 1st based on Zacks' Quant Rating; Retail Price is $495/yr and includes 6 different services including those below. Read our Zacks Review. | ||||||
| 3. |  Moby.co | 50% | 16% | 74% | 2,569% | January Promotion: Next pick free! |
| Summary: 60-150 stock picks per year, segmented by industry; consistently beating the market every year; retail price is $199/yr. Read our Moby Review. | ||||||
| 4. | Zacks Top 10 | 36% | 15% | 71% | 170% | January Promotion: $1, then $495/yr |
| Summary: 10 stock picks per year on January 1st based on Zacks' Quant Rating; Retail Price is $495/yr and includes 6 different services. Read our Zacks Review. | ||||||
| 5. |  TipRanks SmartInvestor | 20% | 9% | 62% | 464% | Current Promotion: Save $180 |
| Summary: About 1 pick/week focusing on short term trades; Lifetime average return of 355% vs S&P500's 149% since 2015. Retail Price is $379/yr. Read our TipRanks Review. | ||||||
| 6. |  Action Alerts Plus | 27% | 5% | 66% | 208% | Current Promotion: None |
| Summary: 100-150 trades per year, lots of buying and selling and short-term trades. Read our Jim Cramer Review. | ||||||
| 7. | Zacks Home Run Investor | 5% | -0.4% | 45% | 241% | January Promotion: $1, then $495/yr |
| Summary: 40-50 stock picks per year based on Zacks' Quant Rating; Retail Price is $495/yr. Read our Zacks Review. | ||||||
| 8. | Dogs of the Dow Strategy | 16% | -1.8% | 43% | 44% | Current Promotion: None |
| Summary: Buy the 10 highest yielding dividends stocks in the Dow Jones Industrial Average on January 1st and sell on Dec 31st each year. | ||||||
| 9. | IBD Leaderboard ETF | 11.4% | -1.8% | n/a | n/a | January Promotion: NONE |
| Summary: Maintains top 50 stocks to invest in based on IBD algorithm; Retail Price is $495/yr. Read our Investors Business Daily Review. | ||||||
| 10. |  Stock Advisor | 34% | -3.9% | 75% | 289% | January Promotion: Get $100 Off |
| Summary: 2 picks/month and 2 Best Buy Stocks lists focusing on high growth potential stocks over 5 years; Retail Price is $199/yr. Read our Motley Fool Review. | ||||||
| 11. | Zacks Under $10 | -0.2% | -4% | -4.3 | 263% | January Promotion: $1, then $495/yr |
| Summary: 40-50 stock picks per year based on Zacks' Quant Rating; Retail Price is $495/yr. Read our Zacks Review. | ||||||
| 12. | Rule Breakers | 34% | -5.1% | 69% | 320% | Current Promotion: Save $200 |
| Summary: Rule Breakers is included with the Fool's Epic Service. Get 5 picks/month focusing on disruptive technology and business models; Lifetime average return of 355% vs S&P500's 149% since 2005; Now part of Motley Fool Epic. Read our Motley Fool Epic Review. | ||||||
| Top Ranking Stock Newsletters based on their last 3 years of stock picks covering 2025, 2024, and 2023 performance as compared to S&P500. S&P500's return is based on average return of S&P500 from date each stock pick is released. NOTE: To get these results you must buy equal dollar amounts of each pick on the date the stock pick is released. Investor Business Daily Top 50 based on performance of FFTY ETF. Performance as of December 27, 2025. | ||||||