A bond that carries a limited or low risk of default and therefore is granted high ratings by credit rating agencies. This category of bonds is considered investment-grade in the sense that it suits normal investment requirements and expectations.

Given their low risk, these bonds are usually issued at lower yields than bonds with higher default risk. On rating scales, investment-grade bonds are classified Baa (by Moody’s) or BBB (by S&P and Fitch).

These bonds are also referred to as high-grade bonds.