What are Investment Grade Bonds?

Definition: Investment Grade Bonds are all bonds with a good to outstanding credit rating. These bonds promise timely interest payment and repayment, as the credit quality of the bond issuer is very solid. Investors consider Investment Grade Bonds as bonds within the rating categories AAA to BBB-.

 

Importance of Investment Grade Bonds

AAA and AA Bonds offer the highest credit quality and are also known as High Grade Bonds.

A Bonds offer good credit quality.

BBB Bonds offer an adequate to good credit quality. BBB Bonds are the Investment Grade Bonds with the lowest rating and run the risk of falling out of the Investment-Grade-Universe with a rating downgrade. This could led to a price decrease of the bond.

Many big investors like pension funds are obliged to invest their money only in bonds within the Investment-Grade-Range. Therefore Investment Grade Bonds are considered as the biggest and most liquid bond market. Bonds with lower rating are speculative and no safe investment.

 

Selection of Investment Grade Issuers

(as of 2012-08-14)

AAA and AA Rating: check out High Grade Bonds

A Rating:

  • ABB
  • Anheuser Busch Inbev
  • AT&T
  • AXA
  • Barclays Bank
  • BHP Billiton
  • BMW
  • BP
  • Caterpillar
  • Coca-Cola
  • Credit Suisse
  • Daimler
  • Deere & Co
  • Deutsche Bank
  • Glaxo Smith Kline
  • LVMH
  • National Grid
  • Philip Morris Int.
  • Schlumberger
  • Swedbank
  • Telenor
  • Toyota
  • Unilever
  • Volkswagen

BBB Rating:

  • British American Tobacco
  • Deutsche Telekom
  • Heineken
  • Kellogg Company
  • Spain
  • Ireland
  • Italy