Investment grade

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Investment grade

In the context of bond ratings, the rating level above which institutional investors have been authorized to invest.

Investment Grade

Describing a bond with a medium or high rating. Bonds rated Baa3 by Moody's or BBB- by S&P or Fitch. Investment-grade bonds are considered sufficiently low-risk that the law allows banks to invest in them. In addition to being low-risk, investment-grade bonds are low-return, greatly reducing the cost on the issuer. Most American Treasury and municipal bonds are investment-grade. See also: Junk, High-Rating.

Investment grade.

When a bond is rated investment grade, its issuer is considered able to meet its obligations, exposing bondholders to minimal default risk.

Most US corporate and municipal bonds are rated by independent services such as Moody's Investors Service and Standard & Poor's (S&P).

The ratings are based on a number of criteria, including the likelihood that the bond issuer will be able to make interest payments and repay the principal in full and on time.

The four categories of bonds rated BBB and higher by S&P or Baa and higher by Moody's are considered investment grade.

References in periodicals archive ?
In his newly created position, Wolff will oversee the management and growth of the bank's US dollar high grade bond syndicate.
3 trillion in money market funds and purchasing more than $400 billion in domestic high grade bond funds during the year.
Page 23) Investors remain skeptical keeping -- in money market funds and purchasing more than $400 billion in domestic high grade bond funds during the year.
NEW YORK -- For the first time, high grade bond investors can receive hours of insightful analysis on the structure of new bond offerings delivered to them pre-pricing -- all in layman's terms -- neatly packaged in a clear and concise report and from which they can take away the important points in just minutes.
The company has very modest exposure to real estate related assets, has a very high grade bond portfolio, and has minimal problem investments.
RBS has recently made several senior level additions to its Fixed Income business in the US including Peter Najarian as Global Head of Local Market Sales, Stephen Monroe as Head of Short-Term Market Sales for the Americas, Wight Martindale as Head of High Yield and Distressed Debt Sales, Scott Lang as Head of Regional Dealer Sales for the USD Rates Business, Boris Segura as Senior Economist for Latin America, Victor Forte as Head of High Grade Bond Syndicate, and Eugene Rigo as Short-end US Treasury trader.
Forte as Managing Director and Head of High Grade Bond Syndicate for the Americas.
Similar financial covenants, quite unusual in the high grade bond market, are common to bonds issued by below investment grade-rated companies.
With this expanded agreement, on a global basis, Merrill Lynch will now be using independent evaluated prices for 80% of the entire Merrill Lynch Global High Grade Bond Index universe, and 90% of the entire Global High Yield & Emerging Markets Index universe, which together comprise more than 24,000 securities.
The new index was introduced at The Bear Stearns Central American and Caribbean Credit Conference and will compliment Bear Stearns current Fixed Income indexes, the High Yield Bond Index (BSIX) and the High Grade Bond Index (BSHG).
David's appointment underlines our commitment to this area and will serve as a catalyst for the next stage of development for the High Grade bond business.
Contract award: Investment Management Agreement (concerning investment management of Danish High Grade Bonds for the Professional Association LD).

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