Companies and governments need to borrow money. Special agencies assign credit ratings to assess their ability to repay the debt. AAA is the top score, highlighting the relatively low risk of investing in these companies or governments.
Companies with a triple-A credit rating are less likely to miss their payments to investors, meaning the risk of default is negligible. Thus, they attract many investors willing to lend them money. However, AAA-rated companies tend to offer investors lower yields than others, as the risk is lower. You might be surprised, but only two companies in the United States have an AAA credit rating: Microsoft and Johnson & Johnson.
Standard & Poor’s, an international rating agency, awarded 11 countries with AAA credit ratings.
This list contains countries with exceptional economic stability and the highest level of creditworthiness.
Overall, credit ratings play an essential role in the financial world, showing how risky an investment is. The rating can be upgraded and downgraded. Indeed, there were cases when countries and companies lost their AAA ratings. For example, Standard & Poor’s lowered the rating of the United States from AAA to AA+ level in 2011.