Bond Ratings Chart: S&P, Moody’s & Fitch Scales Compared

The Bond Rating Scale at a Glance

Investment grade is the top four rating categories (AAA, AA, A, and BBB at S&P and Fitch; Aaa, Aa, A, and Baa at Moody’s). Speculative grade begins at BB+/Ba1. The table lists net lease tenants rated at each S&P notch, drawn from our ratings database, and updates when a rating changes.

Examples are tenants in our ratings database rated in their own name (or through a bank holding company) by S&P Global Ratings; the Moody’s and Fitch ratings of the same company can differ by a notch or more. Ratings checked October 8, 2026.

For corporate issuers outside net lease: Microsoft and Johnson & Johnson are the two U.S. companies rated AAA by S&P, and Moody’s has rated Apple Aaa since December 2021.

Is Baa3, Baa2, or BBB‑ Investment Grade? Quick Answers by Notch

Yes, Baa3 is investment grade. It is Moody’s lowest investment grade rating, equivalent to BBB‑ at S&P and Fitch. Every Moody’s rating from Aaa through Baa3, and every S&P or Fitch rating from AAA through BBB‑, is investment grade: ten notches on each scale. Ba1 and BB+ are the highest speculative grade notches. The data shows why the line matters: in S&P’s 1981 to 2024 study, the average ten-year cumulative default rate was 2.86% for issuers rated BBB versus 10.44% for BB.

Moody’s vs S&P vs Fitch: How Do the Rating Scales Compare?

Moody’s writes its ratings with number modifiers (Aa1, Aa2, Aa3), while S&P and Fitch use plus and minus signs (AA+, AA, AA‑). From the top through the B categories the notches line up one for one, so Baa2 at Moody’s corresponds to BBB at S&P and Fitch, and all three draw the investment grade line between Baa3/BBB‑ and Ba1/BB+.

The bottom of the scales differs. Moody’s long-term scale has 21 notches, from Aaa to C, and has no separate default symbol; Ca and C are typically assigned to obligations in or near default, with C indicating little prospect of recovery. S&P’s long-term scale runs from AAA through CCC‑, CC, and C, where C means highly vulnerable (for example, a bankruptcy filing while payments continue), and S&P uses separate symbols, D and SD, once a default occurs. Fitch uses RD and D for defaults.

Modifiers rank issuers within each category: Moody’s 1, 2, and 3 and S&P and Fitch plus, plain, and minus run from strongest to weakest.

The Three Agencies Behind Every Rating

S&P Global Ratings, Moody’s, and Fitch Ratings are registered with the SEC as Nationally Recognized Statistical Rating Organizations, and together they account for the large majority of credit ratings outstanding, according to the SEC’s annual staff report on NRSROs. Each issues independent opinions, so a bond often carries two or three ratings. They usually agree within a notch; when they differ by more, the bond is said to be split rated.

For how the agencies work and where their methods differ, see the role of credit rating agencies and the guide to Moody’s investment grade ratings.

Investment Grade vs Speculative Grade: The BBB‑ Line

The most consequential line on any rating scale sits between BBB‑ and BB+ (Baa3 and Ba1 at Moody’s). It shapes demand for a bond in several ways.

• Investment mandates. Some institutional portfolios, including many insurance company, pension, and money manager mandates, are limited to investment grade debt or hold only a small allowance for high yield. Others can buy high yield freely. The rule that applies depends on the investor’s guidelines and regulators.
• Regulatory capital. Insurance and bank capital rules generally require more capital against lower-rated holdings, which makes investment grade bonds cheaper for those institutions to own.
• Index membership. Investment grade indexes such as the Bloomberg US Corporate Index and the ICE BofA US Corporate Index include only bonds whose index rating is BBB‑ or higher; high yield indexes take the bonds below that line. A downgrade across the line moves a bond from one index family to the other, and funds that track the indexes adjust their holdings.
• Borrowing costs. Today the BB index spread is 98 bps wider than the BBB index spread (204 bps versus 106 bps).

For net lease investors, the same line matters because the market that reprices a tenant’s bonds also reprices its real estate. Walgreens, which was taken private by Sycamore Partners on August 28, 2025 and has no public rating on file, now has a median asking cap rate of 7.50% across its active listings. See what investment grade actually means.

The Prime Tier: AAA / Aaa

AAA is the top of the scale, reserved for issuers S&P judges to have extremely strong capacity to meet their financial commitments. Only two U.S. companies hold AAA from S&P: Microsoft and Johnson & Johnson. Moody’s has rated Apple Aaa since upgrading it on December 21, 2021.

The U.S. government is no longer AAA at any of the three agencies. S&P lowered the United States to AA+ in August 2011, Fitch to AA+ in August 2023, and Moody’s to Aa1 in May 2025, ending a top rating at Moody’s that dated to 1917. As a result, S&P rates Microsoft and Johnson & Johnson one notch above the U.S. government.

High Grade: AA+ / AA / AA‑ (Aa1 / Aa2 / Aa3)

The AA category indicates very strong capacity to meet financial commitments. In S&P’s 1981 to 2024 study the average one-year default rate for AA issuers was 0.02%. Net lease tenants in this tier, such as Walmart and Costco, are listed in the scale table above. Their properties attract the most conservative buyers, but cap rates also depend on location, lease term, and whether the lease is a ground lease.

Upper Medium Grade: A+ / A / A‑ (A1 / A2 / A3)

The A category indicates strong capacity to pay, with somewhat more sensitivity to adverse economic conditions than AA. Large banks, several big-box retailers, and some health systems sit here; current examples are in the scale table above. Bank ratings in our database are for the entity named on each tenant page, which may be the holding company or the bank.

Lower Medium Grade: BBB+ / BBB / BBB‑ (Baa1 / Baa2 / Baa3)

The BBB category indicates adequate capacity to pay, with adverse conditions more likely to weaken it. It is the largest investment grade category by number of issuers, and many of the most traded net lease tenants are here. BBB‑/Baa3 is the investment grade floor: one more downgrade moves the issuer to high yield, which is why BBB‑ credits on negative outlook are watched closely. The scale table above lists current BBB‑ tenants.

Non-Investment Grade (High Yield): BB+ Through B‑

Below the line, bonds are called speculative grade, high yield, or junk. The BB category faces major ongoing uncertainties but is less vulnerable in the near term; the B category currently has the capacity to pay, but adverse conditions would likely impair it. In S&P’s 1981 to 2024 study, average one-year default rates were 0.56% for BB and 2.93% for B. Many restaurant, service, and specialty retail tenants are rated in these categories; see the scale table above.

Substantial Risk and Default: CCC Through D

The CCC category identifies issuers that are currently vulnerable and dependent on favorable conditions to pay. Defaults concentrate here: of the 130 issuers that defaulted in 2024 and were rated at the start of the year, 97, about three-fourths, were rated in the CCC/C category, according to S&P’s 2024 default study.

In net lease, recent defaults include Rite Aid, which filed for Chapter 11 in October 2023; 99 Cents Only, which filed in April 2024 and liquidated; and Joann, which filed for the second time in January 2025 and liquidated.

Rating Outlooks and CreditWatch

Agencies attach outlooks that signal the likely direction of a rating over the intermediate term, generally six months to two years:

• Stable: a change is unlikely.
• Positive: the rating may be raised.
• Negative: the rating may be lowered.
• Developing: the rating could move either way, often because of a pending transaction.

S&P uses CreditWatch for a more immediate review, typically resolved within 90 days; Moody’s places ratings on review and Fitch uses Rating Watch. An outlook or watch does not change the rating itself, but a negative outlook at BBB‑ is a warning that the issuer could fall out of investment grade.

Historical Default Rates by Rating

S&P’s long-running study shows how ratings have lined up with actual defaults. The table shows average cumulative default rates for global corporate issuers by rating at the start of each period, 1981 through 2024.

Source: S&P Global Ratings, “Default, Transition, and Recovery: 2024 Annual Global Corporate Default And Rating Transition Study,” March 27, 2025, table 24. Moody’s and Fitch publish their own studies with different figures.

Two patterns stand out. Default rates within investment grade are low, under 3% over ten years even in the BBB category. Below the line they rise quickly: the ten-year rate roughly doubles from BB to B, and the one-year rate for CCC/C is about nine times that of B.

What Bond Ratings Do Not Tell You

• Ratings measure default risk, not price risk. A AAA bond can lose value when interest rates rise.
• Ratings can lag. When a business deteriorates quickly, ratings may follow rather than lead the market.
• Ratings are not equity views. A strong rating says the company will likely repay debt, not that its stock is a good investment.
• Ratings can be wrong. The 2008 financial crisis exposed failures in ratings of mortgage-backed and structured securities, and the issuer-pays model remains a potential conflict.
• Ratings do not cover lease specifics. For net lease investors, a strong tenant rating says nothing about the store’s performance, the remaining term, the guarantor, or the real estate’s residual value.

For more, see the biggest problems with credit rating agencies.

How Bond Ratings Relate to NNN Cap Rates

Tenant credit is one input into net lease pricing, alongside location, lease term, rent increases, and lease structure. The table groups active listings by the rating of tenants rated in their own name. In our data, A-rated tenants ask lower cap rates than BBB-rated tenants, but tenants rated below investment grade do not ask uniformly higher cap rates, because many are restaurant and service brands on small, well-located sites, often ground leases, that buyers price on the real estate as much as the credit.

Active listings InvestmentGrade.com tracks with an asking cap rate (stated, or computed from stated income and price when no rate is stated), listings last observed October 9, 2026, grouped by the rating of tenants rated in their own name; franchised brands rated only through a parent company are left out because a parent’s rating applies to a franchisee’s lease only if the parent signs or guarantees it. Asking cap rates are not closed-sale cap rates, and location, lease term, and ground lease structure move cap rates as much as the rating. Categories with fewer than 10 listings are not shown (CCC and lower).

Investment Grade Credit Tenant Ratings

InvestmentGrade.com maintains a database of credit ratings for net lease tenants: 190 tenants, 84 of them rated investment grade. Each tenant page shows the S&P, Moody’s, and Fitch ratings on file, the rated entity, the source, and the date the rating was checked. Browse the tenant ratings database.

Where Credit Spreads Sit Right Now

A rating is an opinion about default risk; a spread is what the market charges for that risk, measured in basis points over Treasuries. The table updates each business day.

ICE BofA US Corporate (AAA to BBB) and US High Yield (BB to CCC) index effective yields and option-adjusted spreads, from the Federal Reserve Bank of St. Louis (FRED), as of October 1, 2026. The range covers the daily history FRED currently publishes for these series, which begins October 3, 2023. Updated each business day.

Moving from the BBB index to the BB index currently adds 98 bps of spread, and moving from single-B to CCC and lower adds 886 bps. The steepest increase is at the bottom of the scale, not at the BBB‑/BB+ line; these broad category indexes also do not isolate the single notch at the line. For property owners, when spreads are narrow the extra yield on a lower-rated tenant is thin relative to the re-leasing risk. See what a cap rate is and how it is calculated.

Frequently Asked Questions

Related Reading

• Investment Grade Bonds: Yields, Ratings and Sector Analysis
• Investment Grade vs. High Yield Bonds
• The Role of Credit Rating Agencies
• Moody’s Investment Grade Ratings
• Investment Grade Scoring: The Language of Credit Ratings
• What Investment Grade Actually Means
• What Is Investment Grade? Complete Guide
• Investment Grade Triple Net Lease Guide
• Investment Grade Credit Tenant Ratings