Economy
Sovereign Credit Rating
Definition
An assessment by rating agencies (S&P, Moody's, Fitch) of a government's ability and willingness to repay its debts.
Explanation
Ratings range from AAA (highest quality, lowest risk) to D (default). Higher ratings mean lower borrowing costs. A downgrade can increase interest payments by billions. The US, Germany, and Singapore hold top ratings, while countries in default or near-default receive the lowest. Ratings are controversial — agencies were criticized for failing to predict the 2008 financial crisis.