investment-grade

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.
References in periodicals archive ?
Standard & Poor's Ratings Services has lifted Ford's credit rating to investment-grade status on healthy sales in North America.
For this reason, most bond deals are given below investment-grade ratings or are left non-rated.
Indeed, after 1981 the use of call options by investment-grade firms decreases dramatically (see Crabbe (1991)), effectively nullifying the attempts of theorists in earlier decades to explain why nearly all bonds are callable.
For investment-grade nonfinancial corporations, medium-term notes became a growing source of funds.