Knowing exactly what a specific bond rating means takes a lot of detailed understanding. Bond ratings can actually become very complex with Moody’s, for example, having 21 different ratings. However, things can be simplified by remembering some key points.
First, the more of a letter, the higher the rating within that category. For example, AAA rates higher than AA +. Pluses and minuses mean exactly what you think they would mean, but do not change the basic principal that more letters is a higher rating. Thus, A+ is a lower rating than AA-. (AA- has two A’s whereas A+ has just one A.) All things being equal this can help sort bond yields by ratings, higher rated bonds pay less interest and lower rated bonds pay more interest to account for the additional risk.
Second, the dividing line between investment grade bonds and junk bonds is BBB- or Baa3 for Moody’s.
Lastly, three A’s is the highest rating for all three agencies, Aaa for Moody’s and AAA for S&P and Fitch.