QUICK DEFINITION
Investment-Grade Bond is a bond carrying a credit rating within the higher-quality rating categories used by major rating agencies.
WHY IT MATTERS
Why Investment-Grade Bond matters in bond markets
Investment-grade bonds generally have lower expected default risk and tighter spreads than high-yield debt.
MARKET CONTEXT
How to think about it
Bond investors use investment-grade bond as part of a wider framework that links prices, yields, cash flows, liquidity and risk. The concept should therefore be read together with its related terms rather than as an isolated definition.
Is Investment-Grade Bond important for fixed-income investors?
← Back to the Bond Market Glossary Yes. Investment-grade bonds generally have lower expected default risk and tighter spreads than high-yield debt.