What is the definition of a Ratings Agency?

A rating agency is a firm that attempts to provide a rating for the credit-worthiness of a corporation, government or bond. The more likely the borrower is to repay, the higher the credit rating they receive.

The 3 largest credit rating agencies in the world are:

• Moody's
• Standard & Poors
• Fitch

Typically, anything assigned a rating of AAA, AA, A or BBB is deemed to be of investment-grade whilst anything below is junk (i.e. very risky and unlikely to pay off).