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Investment-Grade

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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
Of, relating to, or being a bond suitable for purchase by institutions under the prudent man rule. Investment-grade is restricted to those bonds graded BBB and above by Standard & Poor's and graded Baa3 and above by Moody's. Also called bank-grade. Compare high-grade.


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Moreover, high-yield debt has outperformed investment-grade debt, and tighter monetary policy does not seem an immediate prospect, which should help the asset class.
The Federal Reserve has announced that it will extend the Term Asset-Backed Securities Loan Facility (TALF) program through March 31, 2010, for "legacy" (existing) commercial mortgage-backed securities (CMBS); and through June 30, 2010, for newly issued investment-grade CMBS.
Yields on junk bonds have dropped from more than 20% to under 10% during the past eight months, while investment-grade bonds pay one-third of what they did at the height of the crisis.
 
 
 
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