Bond Ratings

Standard & Poor's Rating Service Definitions

• Bonds Rated "AAA" have the highest rating assigned. Capacity to pay interest and repay principal is extremely strong.
• Bonds rated "AA" qualify as high quality debt obligations. Capacity to pay principal and interest is very strong, and in the majority of instances they differ from "AAA" issues only in a small degree.
• Bonds rated "A" have a strong capacity to pay principal and interest, although they are somewhat more susceptible to the adverse effects of change in circumstances and economic conditions.
• Bonds rate "BBB" are regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in the higher rated categories.
• Plus (+) or Minus (-): To provide more detailed indications of credit quality, the ratings from "AA" to "BBB" may be modified by the addition of a plus or minus sign to show relative standing with the major rating categories.

Moody's Rating Service Definitions

• Bonds which are rated "AAA" are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edge." Interest and payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.
• Bonds which are rate "AA" are judged to be of a high quality by all standards. Together with the "AAA" group, they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in "AAA" securities or fluctuation of protective elements may be of great amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in the "AAA" securities.
• Bonds which are rate "A" possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment some time in the future.
• Bonds which are rate "BAA" are considered as medium grade obligations; i.e, they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.

General Note

Those Bonds in the "AA," "A," and "BAA" groups which Moody's believes possess the strongest investment attributes are designated by the symbols "AA1," "A1" and "BAA1." Under the expanded rating scale adopted by Moody's January 7, 1997 the numerical rating modifiers 2 and 3 have been added for long-term debt. The numerical modifier 2 indicates that the security is in the mid-range of its category, while the modifier 3 indicates that the issues is in the lower end of its generic category.

A triple-A (AAA) rating will have no numerical modifier; it remains Moody's highest bond rating. Also, generic rating CAA, CA, and C do not have numerical modifiers. Moody's ratings for short-term debt issues and commercial paper issuers have not changed.