Bonds are generally rated by one or both of the two major credit rating agencies accepted in the industry: Moody's Investor Service and the Standard & Poor's Corporation. They assign ratings to a bond issue based on the issuer's ability to make the scheduled interest and principal payments. These ratings are reviewed periodically and may be revised at any time. Moody's S&P Description -------------------------------------------------------------------------------------------------------- *Aaa AAA Strongest capacity to pay interest and repay principal.
*Aa AA Very strong capacity to pay interest and repay principal.
*A A Strong capacity to pay interest and repay principal.
*Baa BBB Adequate capacity to pay interest and repay principal.
*Ba BB Lowest degree of speculation with respect to capacity to pay interest and repay principal.
*B B Greater vulnerability to default but currently has the capacity to meet interest and principal payment.
*Caa CCC Currently vulnerable to default -- dependent on favorable conditions.
*Ca CC Highly speculative.
*C C/CI Highest degree of speculation -- no interest is paid.
*- D In payment default.
Standard & Poor's attaches a plus or minus sign to ratings to indicate that a credit is considered to be in the upper or lower segment of the rating category. Moody's breaks down its ratings by using numerical modifiers 1, 2 and 3. Note that both rating services may not respond in a timely manner to information with respect to an issuer, which could result in a change of rating.