Investment grade


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Related to Investment grade: Moody's investment grade

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 ?
Importantly bondholders of the higher investment grade credits have limited protection from leveraged transactions.
The FRNI provides a comprehensive, accurate representation of the investment grade floater market and its components.
At issuance, the weighted-average interest rate of the investment grade securities was one-month LIBOR plus 48 basis points, excluding transaction costs.
The old adage 'What does not kill me makes me stronger' can be accurately applied to Turkey's long and hard climb back to investment grade status after enduring the crises of 1994, 1999 and 2001.
So before seeking an investment grade bond rating, build up cash and improve liquidity.
Many lenders are now enthusiastically expanding their offerings to below investment grade co-ops.
Most issuers have investment-grade ratings: Of the $72 billion in medium-term notes outstanding at the end of 1989, only $1 1/4 billion had ratings below investment grade, and most of those notes were issued originally as investment-grade debt.

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