Bond ratings are assessments of a bond’s creditworthiness and risk issued by rating agencies like Moody’s and S&P, and they can help investors gauge the safety and reliability of a bond investment. Ratings range from high (e.g., AAA) for the lowest risk to lower ratings (e.g., BB or below) indicating higher risk. Investors use these ratings to make informed decisions, balancing risk and return. Lower-rated bonds offer higher potential returns but come with increased risk, including the possibility of default. Bond ratings provide a valuable reference point for investors to align their risk tolerance and investment goals with the appropriate bonds in their portfolios.