Glossary of financial terms relevant to the current project

AAA - AAA is the highest possible rating that may be assigned to an issuer's bonds by any of the major credit rating agencies. AAA-rated bonds have a high degree of creditworthiness because their issuers are easily able to meet financial commitments and have the lowest risk of default. Rating agencies Standard & Poor's (S&P) and Fitch Ratings use the letters "AAA" to identify bonds with the highest credit quality, while Moody's uses the similar "Aaa", to signify a bond's top tier credit rating.

AA+/Aa1 - AA+ and Aa1 are the second-highest ratings that can be assigned to debt by Standard & Poor's Financial Services (S&P) and Moody's Investors Service, respectively.

Bond - In finance, a bond is an instrument of indebtedness of the bond issuer to the holders. The most common types of bonds include municipal bonds and corporate bonds. Bonds can be in mutual funds or can be in private investing where a person would give a loan to a company or the government.

Bond Credit Rating - In investment, the bond credit rating represents the credit worthiness of corporate or government bonds. It is not the same as an individual's credit score. The ratings are published by credit rating agencies and used by investment professionals to assess the likelihood the debt will be repaid.

Credit Rating - A credit rating is an evaluation of the credit risk of a prospective debtor, predicting their ability to pay back the debt, and an implicit forecast of the likelihood of the debtor defaulting.

Credit Rating Agency - A credit rating agency is a company that assigns credit ratings, which rate a debtor's ability to pay back debt by making timely principal and interest payments and the likelihood of default.

Credit Spread - In finance, the yield spread or credit spread is the difference between the quoted rates of return on two different investments, usually of different credit qualities but similar maturities. It is often an indication of the risk premium for one investment product over another.

Consumer price index - A consumer price index measures changes in the price level of a weighted average market basket of consumer goods and services purchased by households. A CPI is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically.

Inflation - In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.

Distance to default - The distance to default (DD) and the probability of default (PD) are the essential credit risks in the finance world. It provides an estimate of the likelihood that a borrower will be unable to meet its debt obligations.