Investment grade
Fixed IncomeDefinition
Bond credit rating of BBB- or above (S&P/Fitch) or Baa3 or above (Moody's). Considered low-default-risk by major rating agencies. Default rates: ~0.1% per year for AAA-AA, ~0.3% for A, ~0.7% for BBB.
Most pension funds and insurance companies are restricted to investment grade. The "fallen angel" trade: bonds downgraded from IG to junk often overshoot to the downside as forced sellers dump them, creating opportunities.
Most pension funds and insurance companies are restricted to investment grade. The "fallen angel" trade: bonds downgraded from IG to junk often overshoot to the downside as forced sellers dump them, creating opportunities.
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