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 ?
Contract award notice: corporate debt investment grade bonds denominated in eur, active management.
The proceeds of the fund's initial offering of units have been invested in a portfolio of investment grade bonds issued by Canadian issuers mainly and up to 10% of it may be invested in US investment grade bonds.
Pakistan's banking sector appears to be hedging against a possible drag on dollar repayments by the State Bank of Pakistan by investing their excess dollars in investment grade bonds issued abroad besides remaining long in dollars within NOSTRO Limits fixed by SBP.
The Waverton Global Bond Fund, which invests in Government bonds and investment grade bonds from around the world, aims to outperform both the global bond peer group and cash over any three year period.
The rating downgrades of North Coast Life are based on the increased level of below investment grade bonds relative to capital and surplus and the significant potential for North Coast Life's already low capital base to decline further, bringing it close to a regulatory minimum for a key state of operation.
The fund added that the proceeds of the initial offering of units have been invested in a portfolio consisting mainly of investment grade bonds issued by Canadian issuers and which are available to domiciled investors and that up to 10% of the portfolio may be invested in US investment grade bonds.
Patrick Vogel, lead manager on Schroder ISF EURO Credit Conviction and Head of European Credit, added:"As the eurozone economies move into a stabilisation phase, providing a more supportive environment for credit, we are seeing a sweet-spot for European credit with opportunities across the investment space, particularly in higher yielding investment grade bonds.
The Fund's investment objective is to provide current income and capital appreciation by investing primarily in a diversified portfolio of investment grade bonds.
The company also has a highly concentrated operational focus in the interest sensitive individual annuity market and high exposure to higher risk securities, including less than investment grade bonds and relatively illiquid private placements and limited partnerships.
The $10 billion portfolio consists of 100 investment grade bonds (97 corporate bonds and 3 sovereigns).
High yield, lower rated bonds involve a greater degree of risk than investment grade bonds in return for higher yield potential.
Additionally, while SFG strives to maintain a conservative investment portfolio, it is exposed to a somewhat high level of below investment grade bonds relative to statutory adjusted capital and surplus.

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