As an interest-bearing certificate representing a public or private debt, the bond is a promise from the issuer to pay the holder a specific amount of interest for a specific length of time. The interest for borrowing is known as the coupon.
Upon maturity of the bond, the borrower repays the loan principal (the bond's face value). The guarantee of payback and all coupon payments relies solely on the ability of the borrower to generate enough cash flow to repay bondholders.
Bond ratings through agencies such as Standard & Poor's or Moody's can help investors determine how financially stable the issuer of the bond is. The chart below illustrates the ratings that a bond can be given by both Standard & Poor's and Moody's, as well as what the rating means about the quality of the bond.
| Rating | S&P | Moody's |
| Highest Quality | AAA | Aaa |
| High Quality | AA | Aa |
| Upper Medium Quality | A | A |
| Medium Grade | BBB | Baa |
| Somewhat Speculative | BB | Ba |
| Low Grade, Speculative | B | B |
| Low Grade, Default Possible | CCC | Caa |
| Low Grade, Partial Recovery Possible | CC | Ca |
| Low Grade, Recovery Unlikely | C | C |
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