What does an AAA rating mean for a bond?

An AAA rating means the rating agency sees the highest degree of safety regarding timely payment of interest and principal, and the lowest credit risk. It is the agency's opinion on the chance of default, not a guarantee.

Indian rating agencies registered with SEBI (CRISIL, ICRA, CARE Ratings, India Ratings, Acuité, Infomerics and others) use the same long-term scale, from AAA down to D. A rating of AAA means the rating agency sees the highest degree of safety regarding timely payment of interest and principal, and the lowest credit risk. The agency's name comes first, so "CRISIL AAA" and "CARE AAA" are the same grade from different agencies.

AAA bonds are mostly issued by large public sector companies, the biggest banks and NBFCs, and a few large private groups. Because the risk is lowest, AAA bonds usually pay the lowest coupons among corporate bonds, close to government securities.

A "+" or "-" after the grade ranks a bond within the grade: AA+ is above AA, and AA- is below it. The rating comes with an outlook (Stable, Positive, Negative or Developing) that shows which way the agency expects it may move. Ratings change: check the agency's latest press release before investing, not the rating printed in an old offer document.

This page is for information only. It is not investment advice, a credit rating or a recommendation to buy, sell or hold any security. Facts are taken from the issuer's own documents and the sources linked on this page; check them with the source before investing.