Understanding 'Baa' Credit Ratings

Credit ratings serve as an essential indicator of the creditworthiness of debt securities. Investors often rely on these ratings to guide their investment decisions, particularly for fixed income securities. Rating agencies, such as Moody's, Standard & Poor's, and Fitch, assign ratings based on an issuer's ability to meet financial obligations.

Consider the following credit ratings: Aaa, Aa, A, and Baa. Each rating corresponds to a certain level of risk and default likelihood. In the context of these ratings, which of the following statements is true regarding the implications of a bond being rated 'Baa'?