Understanding Credit Ratings in Fixed Income

Credit ratings play a crucial role in the fixed income market as they assess the creditworthiness of bond issuers. Credit rating agencies assign ratings based on the issuer's ability to meet its financial obligations, particularly in terms of timely interest payments and the return of principal at maturity. The three main credit rating agencies are Standard & Poor's, Moody's, and Fitch Ratings.

Which of the following statements about credit ratings is accurate?