Investment grade

(redirected from High-Grade Bonds)

Investment grade

In the context of bond ratings, the rating level above which institutional investors have been authorized to invest.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Yields on high-grade bonds have risen half a percentage point since the start of 2018, pushing up the cost of debt financing and lowering issuance overall.
While Kazakhstan is unlikely to find itself in urgent need of the frozen money soon, the freeze may limit its ability to manage a large part of the fund's portfolio, which is mostly invested in high-grade bonds.
New issuance of US high-grade bonds could decline 17 per cent, while net supply drops 34 per cent.
"Our new product was designed to meet demand from financial institutions looking for high-grade fixed-income exposure [weighted average portfolio rating of 'A-' and above], with a higher yield than those offered by high-grade bonds. The breadth and depth of the regional bond market has improved significantly over the past two years, thanks to a wider choice of regional sovereign investment-grade bonds, and investors are looking for more ways to access the market," said Al Hashemi.
Because interest rates on high-grade bonds have been so low for so long, insurers have less investment income they can use to hold down premium costs.
An insurer would report on the amount of market risk benefits it has promised, calculate how changes in yields on high-grade bonds have affected the value of the market risk benefits, and include changes in the value in a figure called "other comprehensive income."
AA rating is the third highest possible rating that can be offered to any country or institution; it means that the country in question have high-grade bonds that have little risk of default.
Taylor said his bill would allow the comptroller to invest some of the fund's balance in "high-grade bonds" and other investments over a "several-year time horizon." The wording in his bill would mandate presently keeping about $4 billion of the fund liquid, and a larger amount liquid in the future as the budget grows, he said.
Syage said they have a low correlation to Treasurys, and if interest rates rise, they would likely hold their value much better than Treasurys and high-grade bonds. "And the fundamentals are still strong in that refinancing risk is down, defaults are low and liquidity is high" he said.
However, the industry typically invests in high-grade bonds and is usually well diversified in geography and bond type.
Dubai credits have outperformed many high-grade bonds in the United Arab Emirates as the year draws to a close.
BBVA US Senior SA Unipersonal, a unit of Banco Bilbao Vizcaya Argentaria SA (BBVA) (NYSE: BBV) (BBVA.MC), has sold a three-year benchmark of at least USD500m in high-grade bonds on Wednesday, Dow Jones has reported, citing a person familiar with the transaction.

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