Dictionary of Business Terms: investment-grade
investment-grade
term used to describe bonds suitable for purchase by prudent investors. Standard & Poor's rating service designates the bonds in its four top categories (AAA down to BBB) as investment grade. In their fiduciary roles, institutional investors, such as pension funds, insurance companies, and banks, must maintain a certain level of credit quality in the bond portfolios they purchase, so they tend to buy mostly investment-grade bonds.Contrast with junk bond.
