classification of stocks and bonds according to risk issued by Standard & Poor's Corporation. S&P's top four grades, called investment-grade AAA, AA, A, and BBB, indicate a minimal risk that a corporate or municipal bond issue will default in its timely payment of interest and principal. Bonds or stocks rated BB or below by Standard & Poor's are considered speculative, and fiduciaries are not allowed to invest in them.
Standard & Poor's opinion on the general creditworthiness of an obligor, or the creditworthiness of an obligor with respect to a particular debt security or other financial obligation. AStandard & Poor's long-term rating reflects a borrower's capacity to meet its financial commitments on a timely basis. Long-term ratings range from the highest category, AAA, to the lowest, D. Ratings from AA to CCC categories may also include a plus or minus sign to show relative standing within the category. A short-term rating is an assessment of the likelihood of timely repayment of obligations considered short-term in relevant markets. Short-term ratings are graded into several categories, ranging from A-1 for the highest quality obligations to D for the lowest. The A-1 rating may also be modified by a plus sign to distinguish the stronger credits in that category. In addition to longterm and short-term ratings, Standard & Poor's has specific rating definitions for preferred stock, money market funds, mutual bond funds, financial strength, and financial enhancement ratings of insurance companies and program ratings for derivative product companies.
