What is a B credit rating?
A credit rating given to a prospective borrower that's not of investment grade Sometimes known as a B2 rating, it suggests a company or government is able to meet its financial commitments but may be left highly exposed to adverse economic conditions.
Key takeaways
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A B credit rating is a non-investment grade rating indicating companies or governments can meet commitments but face high economic exposure.
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B-rated bonds are highly speculative investments with reasonable default risk, often called junk bonds, typically issued by startups or debt-troubled entities.
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While B ratings signal higher risk and impact borrowing ability, they offer potentially higher returns to compensate investors for increased risk.
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B ratings sit between investment-grade status and the worst ratings in a credit system ranging from AAA to D.
The rating is applied to the bonds issued by an organisation. Since there's a reasonable chance of default, B-rated bonds are deemed highly speculative investments.
Where have you heard about B credit ratings?
B is some distance away from the very worst credit ratings, but it's also a few rungs down from being of investment grade. Investors may describe bonds with B ratings as junk bonds, since they tend to be riskier and less popular choices.
What you need to know about B credit ratings.
The credit rating given to a company or government can impact on its ability to borrow money. Those with highly speculative ratings, like B, are deemed riskier for investors compared to investment-grade companies. They're given to entities that may have trouble paying their debts, or start-ups with only a limited track record.
On the upside, bonds with a B rating can offer higher returns than investment-grade bonds. These potentially stronger returns effectively compensate investors for the larger degree of risk they're taking on.
Find out more about B credit ratings.
The credit rating system runs all the way from AAA right down to D. To learn more, see AAA (credit rating) and D (credit rating).