what is the difference between baa and aaa bonds 
the primary difference between baa and aaa bonds lies in their credit ratings and associated risk levels baa bonds are rated as medium grade investments by moody s investors service they are considered to be of moderate credit quality meaning they carry a higher risk of default than higher rated bonds but are still investment grade baa bonds offer higher yields to compensate for the increased risk aaa bonds are rated as high quality investments they are considered to be of the highest credit quality with a very low risk of default aaa bonds are highly stable and offer lower yields because of their lower risk profile 