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Credit rating agencies use letter grades to denote the creditworthiness of companies and countries that issue debt securities such as corporate and government bonds.
The most followed agencies are S&P, Fitch, and Moody’s. Investors pay special attention to their ratings, which range from A to D with pluses and minuses applied to each to indicate how likely it is that a borrower will repay its debt. Higher ratings come with triple letters. Grades that come with a plus are better than those with a minus.
AA+ and AAA are the two highest ratings issued by S&P and Fitch, two of “the big three” credit rating agencies. AAA is the highest score, and AA+ comes right after it, with both signifying a very low risk of default.
Key Takeaways
- The S&P and Fitch AAA ratings are the highest assigned to any debt issuer.
- An AAA rating is the equivalent of the Aaa rating issued by Moody’s.
- AAA ratings are reserved for debt issuers with a high level of creditworthiness and the strongest capacity to repay investors.
- The AA+ rating issued by S&P and Fitch is similar to the Aa1 rating issued by Moody’s and is the second-highest rating after AAA.
- The AA+ rating signifies very low credit risk and indicates that the issuer has a strong capacity to repay its debts.
An Example of Ratings
Finance professionals were kept awake after S&P announced in August 2011 that it was downgrading its credit rating for the U.S. from AAA to AA+. Then, Fitch followed suit on Aug. 1, 2023, also dropping the U.S. rating from AAA to AA+.
The news sent shock waves across the world in 2011, and the vibrations were felt even more the following week when the market dropped over 6% by the end of the day. But that market decline was benign compared to the individual beatings some stocks endured.
Every year, numerous countries get their credit ratings either downgraded or upgraded. Examples from 2024 include Israel and France. Examples from 2025 include Greece and Argentina.
In May 2024, S&P downgraded France’s credit score for the first time since 2013 from AA to AA- due to concerns about the country’s budget deficit. A few months later, in October, S&P downgraded Israel’s rating from A+ to A due to concerns that conflicts risk destabilizing the country’s economy and public finances.
In April 2025, S&P upgraded Greece from BBB- to BBB, citing “unwavering fiscal discipline.”
So why do people care about this, and what do these ratings mean?
S&P and Fitch Ratings
S&P and Fitch rate the debt of countries and companies based on letter grades that span from A to D. A rating of AAA is the highest possible credit rating, while a D rating is the lowest.
| Credit Ratings Scale: Highest to Lowest | |
|---|---|
| S&P Global | Fitch Ratings |
| AAA | AAA |
| AA | AA |
| A | A |
| BBB | BBB |
| BB | BB |
| B | B |
| CCC | CCC |
| CC | CC |
| C | C |
| D | RD |
| D | |
Note
There are also subcategories denoted with + and – symbols. For example, there is AA+, AA, and AA-.
Credit rating agencies consider various factors when assigning grades. Key factors that influence credit ratings include:
- Payment history
- Current debts
- Current cash flows and income
- The overall market or economic outlook
- Other issues that might prevent the timely repayment of debts
What Does AAA Mean?
The S&P and Fitch AAA rating is the highest that can be assigned to any issuer of debt. It’s the same as the Aaa rating issued by Moody’s.
This rating is assigned to investment-grade debt that has a high level of creditworthiness. Debt issuers with the highest rating have the strongest capacity to repay investors. Their strong financial positions give them the lowest chance of default.
Eleven countries have the strongest AAA rating from S&P as of June 2025: Australia, Canada, Denmark, Germany, Liechtenstein, Luxembourg, Netherlands, Norway, Singapore, Sweden, and Switzerland.
What Does AA+ Mean?
The AA+ rating is issued by S&P and Fitch and is similar to the Aa1 rating issued by Moody’s. This rating, the second highest, is still of high quality but falls below the AAA ranking.
S&P says AA+ differs from AAA “only to a small degree” and indicates the issuer’s ability to repay its debt is “very strong.” Fitch makes similar comments, adding that the chance of default with AA+ is “very low.” However, the wording on how repayment ability can be adversely affected by foreseeable events changes from “highly unlikely” with AAA to “not significantly vulnerable” with AA.
Important
The AA+ rating is one of the rankings for investment-grade debt. Investments that are rated with an AA+ rating are financially strong and have a strong likelihood of repaying their debts.
The S&P and Fitch ratings for the United States still sit at AA+ with a stable outlook as of June 2025. The fact that the U.S., the world’s largest economy, went from AAA to AA+ by two rating agencies is a big deal. The downgrade was painful in terms of stature.
On top of that, in May 2025, Moody’s also downgraded the U.S. credit rating from Aaa to Aa1, citing the growing government debt over the past decade. Now, all three rating agencies have downgraded the U.S. from their highest rating.
How Will I Use This in Real Life?
If you’re an investor looking to invest in corporate bonds or sovereign bonds, understanding bond ratings is critical to managing risk. Bonds with higher ratings, such as AAA and AA+, are considered investment grade, meaning they are of the highest quality and very unlikely to default.
Bonds that have lower ratings, such as non-investment grade bonds, have a much higher risk of defaulting. Higher-rated bonds come with a lower yield because they are safer, while lower-rated bonds come with a higher yield, in order to compensate investors for the increased risk.
Knowing the risk and return profile of bonds before investing in them allows you to make investment decisions based on your risk tolerance and financial goals.
Credit ratings also impact a country’s economy. If a country’s credit rating drops, it becomes more expensive to borrow, and this increased expense spreads throughout the economy, impacting everything from inflation levels, taxes, interest rates, and public spending.
Does the U.S. Still Have an AAA Credit Rating?
No, the U.S. no longer has an AAA credit rating from the three main rating agencies. All three have downgraded the U.S. from an AAA rating, citing multiple reasons, such as the growing government debt, continuous debt-ceiling standoffs, and poor fiscal reforms.
What Is the Credit Rating of the U.S.?
The credit rating of the U.S. varies by credit rating agency. Moody’s has assigned the country an Aa1 rating, which is its second-highest rating. S&P and Fitch have assigned the U.S. an AA rating, which is their second-highest rating.
When Did the U.S. Lose Its AAA Credit Rating?
The U.S. was downgraded from AAA to AA+ in August 2011 by S&P and in August 2023 by Fitch, and from Aaa to Aa1 in May 2025 by Moody’s. All three agencies cited the declining predictability of policymaking, last-minute policymaking, and growing government debt.
The Bottom Line
AAA is the highest credit rating assigned by S&P and Fitch, two of the big three credit agencies, and AA+ comes right after it. Both of these credit ratings indicate the entity can be relied on to pay its debts and has a low risk of default.
The differences are slim but enough to merit different categorization. Moving down from AAA to AA+, the terminology changes slightly. Repayment abilities go from being described as “extremely strong” to “very strong” and from “highly unlikely” to “not significantly vulnerable” to being adversely affected by foreseeable events.
