Definition
Investment-grade bonds are rated BBB- or higher by S&P (Baa3 or higher by Moody's). These ratings indicate the issuer has adequate to strong capacity to meet financial commitments. Many institutional investors are required to hold only investment-grade bonds, creating significant demand for this rating tier.
Example
A bond rated A by S&P is investment-grade, suitable for conservative portfolios and institutional mandates requiring high credit quality.
FAQ
What is Investment Grade?
Bonds rated BBB- or higher, indicating relatively low default risk.
Why is Investment Grade important?
Investment Grade helps investors evaluate fixed income and make more informed decisions.