Credit Rating

A credit rating is a grade, issued by agencies like Moody's, S&P, or Fitch, assessing how likely a government or company is to repay its debt in full and on time. Higher-rated borrowers can typically borrow more cheaply, since lenders demand less compensation for less risk; a downgrade signals rising doubt about a borrower's finances and usually pushes its borrowing costs up immediately. A country's own credit rating can move currency and bond markets on the day it changes, since it affects how the whole world prices that country's debt.