1. Bond equivalent ratings among top rating agencies
Equivalent Credit Ratings | Credit Risk | Moody's* | Standard & Poor's** | Fitch IBCA** | Duff & Phelps** | INVESTMENT GRADE | Highest quality | Aaa | AAA | AAA | AAA | High quality (very strong) | Aa | AA | AA | AA | Upper medium grade (strong) | A | A | A | A | Medium grade | Baa | BBB | BBB | BBB | NOT INVESTMENT GRADE | Lower medium grade (somewhat speculative) | Ba | BB | BB | BB | Low grade (speculative) | B | B | B | B | Poor quality (may default) | Caa | CCC | CCC | CCC | Most speculative | Ca | CC | CC | CC | No interest being paid or bankruptcy petition filed | C | C | C | C | In default | C | D | D | D | Source: The Bond Market Association * The ratings from Aa to Ca by Moody's may be modified by the addition of a 1, 2 or 3 to show relative standing within the category.3. Bond average default rate within one year, by Moody's
**The ratings from AA to CC by Standard & Poor's, Fitch IBCA and Duff & Phelps may be modified by the addition of a plus or minus sign to show relative standing within the category.
2. Bond average default rate within one year, by Moody's
Moody's Rating | Average Default Rate Within One Year of Rating (1970-2001) | Definition | Notes | Aaa | 0.00% | Highest Rating Available | Investment grade bonds. | Aa | 0.02% | Very High Quality | A | 0.01% | High Quality | Baa | 0.15% | Minimum Investment Grade | Ba | 1.21% | Low grade | Junk Bonds | B | 6.53% | Very speculative | Caa | 24.73% | Substantial Risk | Ca | Very poor quality | C | Imminent default or in default | According to a Moody’s analysis of bonds from 1983 to 2007, about 0.2% of bonds worldwide with an Aaa rating defaulted within 10 years. That compares with 0.5% of those ranked Aa2 and 1.7% of all investment-grade debt. Almost 32% of high-yield bonds defaulted within a decade, the analysis showed.
3. Credit spreads not far off their highest since the Great Depression, by Moody's
4. Equity earnings yield/Baa spread at historical low, meanings investment grade credits looking most attractive vs. equity since 1930s
5. Difference between 3 month Libor and Treasury bill yields at highest level![File:TED Spread.png](http://upload.wikimedia.org/wikipedia/commons/9/92/TED_Spread.png) 6. Difference between 3 month Libor and Treasury bill Currently the number of non-financial AAA companies in the U.S. dwindled to 6 from more than 60 in the early 1980s, according to S&P. Among them are Automatic Data Processing, Exxon Mobil, GE, Johnson & Johnson, Microsoft and Pfizer. But GE is on the brink of being downgraded, which means its debt service cost could be significantly higher. |