Sovereign credit ratings assess a country's ability to repay its debts. These ratings are provided by major credit rating agencies including Moody's, Standard & Poor's (S&P), and Fitch. Higher ratings (AAA/Aaa) indicate lower default risk and typically result in lower borrowing costs for governments.

Investment Grade: BBB-/Baa3 and above - Considered safe investments
Speculative Grade: BB+/Ba1 to B-/B3 - Higher risk, higher potential returns
High Risk: Below B-/B3 - Significant default risk