B — S&P / Fitch
B2 — Moody’s

A bond issue that has a moderate chance of default but a high yield might be given a B2/B rating by the major ratings institutions.

Bonds are rated based on their risk of default by the Big Three ratings institutions: Moody’s, Fitch, and S&P. The latter two use the same symbols, so if the algorithms and analysts at the two ratings institutions come to similar conclusions, a company might have the same rating from each of them, such as the “B” in this example. B2/B ratings are the 15th ratings down the scale from the top rating of AAA/Aaa.

A bond with such a rating is considered a highly speculative investment. It has a moderate risk of default, but a high yield payout. Default means that a scheduled payment is more than 60 days overdue.

A bond in the B range has about a 20% chance of defaulting, and there is about a 20% chance that an already-defaulted bond will resume payments in the near future, which is called the recovery rate.

Speculative bonds such as this are called “high yield bonds” or “junk bonds.”

The same ratings system also applies to companies and insurers.

What is a Credit Rating?
What are Bond Ratings?