Ratings

Measures of the riskiness of a financial instrument, provided by a ratings agency (such as Standard & Poor’s, Moody’s and Fitch). The higher the credit rating, the lower the risk, and when applied to debt instruments, the lower the interest rate the borrower has to pay. Ratings below a certain level are regarded as high-risk (see junk bonds). The ratings agencies came in for heavy criticism during the financial crisis of 2007-09, when financial instruments that had been rated highly plunged in value.