Bond Ratings Explained: Investment Grade vs Junk Bonds

By Allen Krewzz

Published July 4, 2026Updated July 4, 2026

Bond Ratings Explained: Investment Grade vs Junk Bonds

What Bond Ratings Measure

The Rating Scale

Investment Grade vs Junk Bonds

"Junk" does not mean worthless — many junk-rated companies do meet their obligations. It means the probability of default is statistically higher, which is why the yield premium exists.

Why Ratings Matter to You

Ratings Can Change

Common Mistakes

Conclusion

Bonds

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