Meaning of Ratings for Municipal Bonds

When buying municipal bonds, it is important to look at the municipal bond ratings chart and even more importantly you need to understand the meaning of ratings of municipal bonds. The two major municipal bond rating agencies are Moody's and S&P. See Moody's Ratings and S&P Ratings for municipal bonds for different ratings compared.

On the Moody's and S&P municipal bond rating table, you can read what each municipal bond rating means. Below are more explanations of the meaning of ratings for municipal bonds.

Meaning of Moody's Ratings for municipal bonds

Moody's bond ratings use numerical modifiers 1, 2 and 3 in each generic bond ratings classification from Aa to Ccc.

The bond ratings modifier 1 indicates that the issuer ranks in the higher end of its generic bond ratings category.

The bond ratings modifier 2 indicates a mid-range; and

The bond ratings modifier 3 indicates its rank in the lower end of its generic bond ratings category.

Meaning of S&P Ratings for municipal bonds

S&P ratings apply a plus (+) or a minus (-) to signify subtle variations in credit quality.

Meaning of Ratings for short term municipal notes

Moody's short term MIG ratings are from MIG 1 (the best) through MIG4 (acceptable). If a note is speculative, it is listed as s6. S&P's rates notes SP-1, SP-2, SP-3, and Fitch rates notes between F-1, F-2, and F-3.