BB+ — S&P / Fitch
Ba1 — Moody’s

This rating is the highest non-investment grade category that the ratings agencies will give to a bond. When rating bond issues based on their risk of default, investment grade bonds will range from AAA/Aaa to BBB-/Baa3, in the parlance of Fitch, Moody’s and S&P.

Below this level, starting with the BB+/Ba1 rating, are High Yield Bonds, also known as Junk Bonds.

If an investor chooses wisely, high yield bonds can be some of the best investments in his or her portfolio. The further down the ratings scale a bond appears, the higher the yield; but there is also a higher risk of default. The higher yield paid out on higher-risk bonds is known as the “risk premium,” which is a concept present throughout the investment world.

Investors in this category of bonds are taking on a mild-to-moderate default risk.

In a persistent low interest rate environment, many investors are pushed into higher-risk financial instruments because they cannot get enough of a return on low-risk investments. High yield bonds can be a good alternative to stocks for these investors.

The same rating system is also used for companies and insurers and gives an idea of how capable each one is of paying off its liabilities.

What is a Credit Rating?
What are Bond Ratings?