Investment grade

(redirected from Investment-Grade Bond)

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 ?
and international investment-grade bond and money market funds, has served our clients well."<br />The firm also announced that effective Jan.
Less than two months later, Dell's banks went out to sell what was originally going to be $16 billion worth of investment-grade bonds. But investor demand for the debt proved significantly higher than anticipated, prompting Dell and the banks to increase the order size to $20 billion, the second-largest investment-grade bond offering this year after a $45.8 billion deal for Anheuser-Busch, according to Thomson Reuters.
Industry investment allocation data shows that insurers' stalwart investment-grade bond allocations are giving way to a broader array of risk assets.
investment-grade bond sales in July, they're getting pickier.
aWe would expect primary issuance to continue with the corporates in 2014, taking full advantage of pricing for an investment-grade bond,a London-based UBS AG analysts Kathleen Middlemiss and Tatiana Boroditskaya wrote in an e-mailed research note on the Turkish corporate bond market on Dec.
All other factors remaining the same, if market rates were to have risen by, say, 1%, investment-grade bond yields would have moved from 2% to 3-a 50% increase in yield-while high-yield bonds would have moved from 6.3% to 7.3%, an increase in yield of just 16%.
Rated only one notch above junk by Moody's and Standard & Poor's, Spain is most at risk of forced selling, since some institutional investors only hold investment grade bonds or constituents of investment-grade bond indexes.
The paper analyses two sets of four corporate investment-grade bond indices each, one for the US market and the other for the euro-denominated bond market.
If UK pension plans paying a set benefit were to revert to 50 per cent bond holdings, that would imply a flow into bonds of about pounds 210 billion, but the current British investment-grade bond market amounts to about pounds 790 billion - a modest size compared with the potential demand, UBS said.
The two-hour auction was facilitated by the launch of WR Hambrecht + Co.'s OpenBook (www.openbook.com), an internet-based Dutch auction platform for the investment-grade bond market.
Furthermore, the same procedures that are used to check for the existence of this anomaly in the junk bond market are applied to the returns in the investment-grade bond market and the CRSP equally-weighted index to allow for a comparison over business cycles among these three markets.
The heads of Barclays Plc's distressed debt and investment-grade bond trading are both leaving the credit trading unit as part of cuts at its investment bank.