Written by:
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades.

Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

View all posts
Updated August 5, 2020

A- and A3 are actually two ratings from different ratings agencies: Standard & Poor's uses the A- rating, and Moody's uses the A3 rating. Both ratings indicate a relatively high level of creditworthiness.

Ratings agencies use ratings like A- and A3 to rank the creditworthiness of specific borrowers, companies, countries, bonds, insurance policies, etc.

At Moody's, the A3 rating comes after the Aaa, Aa1, Aa2, and Aa3 ratings. The A rating itself denotes that whatever securities are being rated are "upper-medium grade and are subject to low credit risk." The modifier 3 "indicates a ranking in the lower end of that generic category."

At Standard & Poor's, the A rating comes after the AAA and AA ratings, respectively. The A rating itself denotes a "strong capacity to meet financial commitments, but somewhat susceptible to adverse economic conditions and changes in circumstances." S&P can further modify the rating by adding a + or – to show the relative standing within the major rating categories.

Credit ratings attempt to measure the probability of default. Both the A- and A3 ratings are firmly in the "investment-grade" category, which means that they are among the safest obligations in the market

When the ratings agencies change their ratings, the price of securities can change significantly. In some cases, the change in rating even dictates whether investors will have to buy or sell. 

For example, many institutional investors (such as pension funds) are forbidden from investing in bonds rated below investment-grade. So if a bond is downgraded from A- to "junk" status, the fund manager would have to sell it. On the other hand, a fund manager of a junk bond ETF might want to buy it.

Table of Contents
Ask an Expert about A-/A3
Ask an Expert about A-/A3
At InvestingAnswers, all of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about A-/A3.
Be the first to ask a question

If you have a question about A-/A3, then please ask Paul.

Ask a question

Read this next

Don't Know a Financial Term?
Search our library of 4,000+ terms
 - profile
Ask an Expert about A-/A3

By submitting this form you agree with our Privacy Policy