The market in corporate and government securities dwarfs the stock market in terms of the dollar amount of securities traded. Yet the stock market gets all the attention on the television news and in the financial press. Because of this press coverage, many investors do not understand enough about bonds and bond markets, and many investors are too heavily weighted in stocks to have the protection of a diversified portfolio. Most corporate bonds carry a letter-coded rating to indicate their relative credit quality. Meaning Aaa AAA Best quality, with the smallest amount of risk.
Issuers are extremely stable and dependable.
High quality, with a slightly higher degree of long-term risk. A A High to medium quality, with many strong attributes but with some risk exposure to changing economic conditions. Baa BBB Medium quality, currently adequate but with significant risk possible over the long term. Some speculative element, with moderate security but not well safeguarded for the long haul. Caa CCC Poor quality with a clear danger of default.