Finance glossary
Investment Grade
Definition
Bonds rated BBB minus or higher, signaling low default risk.
Investment-grade bonds carry ratings of BBB minus or Baa3 and above, indicating relatively low credit risk. Many institutions are restricted to holding only investment-grade debt. A downgrade below this threshold, becoming a fallen angel, can force selling and raise borrowing costs.
In a sentence
Many pension funds may only hold investment grade bonds rated BBB or higher.
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