Fitch Ratings Scale: AAA to D, Notches, and Outlooks

The Fitch ratings scale runs from AAA at the top to D at the bottom, ranking how likely a borrower is to default on its debt. Everything from AAA down to BBB- is investment grade, meaning default risk is low. Everything from BB+ down to D is speculative grade, often called high yield or junk, where default risk is meaningful and rises sharply as you move down. Within most letter categories, a “+” or “-” fine-tunes the rating, and a separate Outlook signals which way it may move next.¹

The core tool behind these grades is the Long-Term Issuer Default Rating, which measures a corporation’s, bank’s, or government’s vulnerability to default over a multi-year horizon. The same letters carry through Fitch’s other products, with suffixes and modifiers layered on top.

Investment Grade: AAA Through BBB-

Investment grade signals that the borrower is financially solid enough that default is unlikely under normal or moderately stressed conditions. There are four broad tiers.

AAA is the highest rating Fitch assigns. Default risk is about as low as it gets, and the borrower’s ability to pay is unlikely to be shaken by any foreseeable event. Few entities carry it at any given time.²
AA means default risk is still very low and financial strength is formidable, though not quite bulletproof. Most highly rated sovereigns and top-tier banks land here.²
A indicates a strong borrower with low expected default risk, but more exposure to adverse business or economic shifts than an AA peer.²
BBB means default risk is currently low and ability to pay is adequate, but a serious downturn is more likely to impair that ability than for higher-rated borrowers.²

The move from A to BBB matters more than the single-letter difference suggests. A-rated issuers have strong capacity to pay; BBB-rated issuers have adequate capacity. That is a real drop in resilience.

Why BBB- and BB+ Are the Line Everyone Watches

BBB- is the lowest investment-grade notch. One downgrade step pushes an issuer into speculative territory, and that boundary is one of the most consequential thresholds in finance. Many pension funds, insurance companies, and other institutional investors are barred by their own mandates from holding speculative-grade debt. When an issuer slips from BBB- to BB+, it can trigger forced selling across entire portfolios, and borrowing costs typically spike.

Speculative Grade: BB Through C

Below BBB-, default risk rises meaningfully, and investors demand higher yields to compensate. That is why this tier is commonly called high yield.

BB means default risk is elevated, especially if conditions worsen. The issuer has enough flexibility to keep servicing debt for now, but the cushion is thinner than anything in investment grade.²
B means material default risk with only a limited margin of safety. Payments are being made, but ability to continue is vulnerable to any real deterioration.²
CCC indicates substantial credit risk. Default is a real possibility, and the safety margin is very thin.²
CC means default of some kind appears probable.²
C means a default or default-like process has already begun, or the issuer’s ability to pay has been irrevocably impaired.²

D and RD: The Two Default Ratings

At the bottom of the scale sit two labels for issuers that have already failed to pay, and the difference between them can matter to recovery prospects.

D (Default): The issuer has entered bankruptcy, receivership, liquidation, or a similar formal wind-down, or has otherwise ceased operating while debt remains outstanding.²
RD (Restricted Default): The issuer has missed a payment or completed a distressed debt exchange on a specific obligation, but has not entered formal bankruptcy and is still operating.²

An RD issuer is still a going concern and may restructure successfully. Recovery on the defaulted obligation can be meaningfully different than if the company had shut down entirely.

Reading the Plus and Minus Notches

Within each major letter category from AA down to CCC, Fitch adds a “+” or “-” to show where the issuer sits relative to the midpoint of that category. An A+ is near the top of the A range; an A- is near the bottom. These are sometimes called notches, and each step can affect borrowing costs and index eligibility.¹

Notches are not applied to AAA (nothing is higher), or to CC, C, D, and RD, which Fitch treats as definitive endpoints rather than ranges.

Outlooks and Rating Watch: Where the Rating May Be Headed

A rating tells you where an issuer stands today. Fitch layers two forward-looking signals on top.

A Rating Outlook reflects the likely direction of the rating over the next one to two years. Positive means the rating could be raised if current trends continue. Negative means it could be lowered. Stable, the most common designation, means it is expected to stay put. In unusual cases where both positive and negative forces are pulling hard, Fitch may assign an Evolving Outlook.¹ A Positive or Negative Outlook does not guarantee a change, and a Stable issuer can still be moved if circumstances shift suddenly.

Rating Watch is a shorter-term signal, used when a specific event has occurred or is expected that could change the rating relatively soon. Where Outlooks look one to two years out, a Rating Watch typically resolves within six months. It comes in Positive, Negative, or Evolving flavors. Common triggers include announced mergers, regulatory actions, or sudden financial deterioration.

The Short-Term Scale: F1 Through D

Fitch maintains a separate scale for obligations maturing in roughly twelve months or less, such as commercial paper and short-term bank deposits. The long-term scale is about solvency over years; the short-term scale is about liquidity right now.¹

F1 is the strongest capacity for timely payment. When liquidity is especially robust, Fitch adds a “+” to create F1+, at the very top of the scale.²
F2 is good capacity, with a narrower safety margin than F1.
F3 is adequate capacity, more sensitive to short-term changes.
B is uncertain capacity, the short-term equivalent of speculative grade.²
C is highly uncertain capacity under significant liquidity stress.
D means the issuer has defaulted on a short-term obligation.

Short-term and long-term ratings do not always move in lockstep. A company with shaky long-term fundamentals can still have strong near-term liquidity if it recently raised cash, and the reverse also happens. A low long-term rating usually drags the short-term rating down eventually.

Suffixes and Labels That Change What a Rating Means

A few extra tags on a Fitch rating tell you it is not directly comparable to a plain corporate rating.

Structured finance (sf). When rating asset-backed securities, mortgage-backed securities, or collateralized loan obligations, Fitch appends “sf” to the letter grade: AAAsf, BBBsf, and so on. The suffix flags that the rating is based on the cash flows from a pool of underlying assets and the legal structure of the transaction, not on the financial health of any single company.¹ A mortgage-backed security rated AAAsf can be assembled by a bank rated only A, because the legal structure isolates the asset pool from the bank’s own credit risk. The sf rating measures the collateral and the deal, not the originator.

National scale ratings. Alongside its global scale, Fitch publishes national scale ratings that rank issuers only against others in the same country, using the standard letters followed by the country’s ISO code in parentheses, such as AAA(bra) for Brazil.² A national AAA does not mean the same thing as a global AAA. A company rated AAA(bra) simply carries the lowest default risk among Brazilian issuers; on the global scale it might rate much lower because of sovereign risk. National ratings should not be compared across borders.

WD and NR. WD means the rating has been withdrawn and the issuer is no longer rated by Fitch, which can happen because the issuer was taken private, the debt was repaid, or Fitch discontinued coverage.³ A withdrawn rating is not a downgrade. NR means Fitch has rated some but not all securities in an issuer’s capital structure; the unrated ones carry the NR label.

How Fitch Compares to Moody’s and S&P

Fitch and S&P use nearly identical letter systems. Moody’s uses a different naming convention that maps cleanly to the same tiers.

Highest quality: Fitch AAA = S&P AAA = Moody’s Aaa
Very high quality: Fitch AA = S&P AA = Moody’s Aa
Upper medium: Fitch A = S&P A = Moody’s A
Lowest investment grade: Fitch BBB = S&P BBB = Moody’s Baa
Speculative: Fitch BB = S&P BB = Moody’s Ba
Highly speculative: Fitch B = S&P B = Moody’s B
Substantial risk: Fitch CCC = S&P CCC = Moody’s Caa
Default: Fitch D = S&P D = Moody’s C

Notching also differs. Fitch and S&P use “+” and “-” (AA+, AA-); Moody’s uses numbers (Aa1, Aa2, Aa3). Moody’s Aa1 equals Fitch AA+. For selective defaults, Fitch uses RD, while S&P uses SD (Selective Default); Moody’s does not offer a direct equivalent.

The three agencies sometimes disagree on the same issuer. When they do, it is called a split rating, and investors typically weigh all available opinions rather than relying on one. Many investment mandates and regulatory frameworks reference ratings from at least two of the three agencies, which is worth keeping in mind: a Fitch rating is one informed opinion, not a guarantee.

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Fitch Ratings. Rating Definitions
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Fitch Ratings. Ratings Definitions
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Fitch Ratings. Fitch Withdraws Dun and Bradstreet Ratings