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Risk (Credit) Rating

For fixed income -- bills, promissory notes, bonds and debt -- the credit rating is used to measure the solvency of a borrower. Solvency refers to the likelihood the borrower will repay the interest and principal it owes. This rating uses a series of letter combinations AAA means maximum solvency and C warns of a high risk of default. Between these two extremes is a series of letters that indicate differing degrees of solvency. Investors worldwide rely on these ratings when deciding whether or not to buy an issue and often make buy or sell decisions based only on this rating.
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