QBE's downgrade was the result of lower than expected earnings which Moody's perceive as an increased risk that QBE may not be able to pay its debt obligations. According to Moody's scale, a 'Baa' rating represents a moderate credit risk and as such "may possess certain speculative characteristics". The '1' indicates being at the top of the scale, while the 'negative' implies the rating may be lowered further. Whether or not you trust rating agencies after their involvement in the diabolical sub-prime mortgage fiasco, it's important to realize the impact credit ratings have on a company's borrowing costs. Origin Energy ( ASX: ORG ) is expected to have to pay higher borrowing costs on up to $2.4 billion of debt to a consortium of banks including ANZ Bank ( ASX: ANZ ) and Commonwealth Bank ( ASX: CBA ) as a direct result of having its credit rating cut to Baa2 by Standard & Poors in March.