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Investment-grade bonds with a lower risk of default are rated BBB up to AAA on the Standard & Poor’s credit rating scale and other models. Junk bonds, or high-yield bonds, are rated below BBB ...
A bond is considered investment grade or IG if its credit rating is BBB− or higher by Fitch Ratings or S&P, or Baa3 or higher by Moody's, the so-called "Big Three" credit rating agencies. Generally they are bonds that are judged by the rating agency as likely enough to meet payment obligations that banks are allowed to invest in them.
Corporate bonds are divided into two main categories High Grade (also called Investment Grade) and High Yield (also called Non-Investment Grade, Speculative Grade, or Junk Bonds) according to their credit rating. [5] Bonds rated AAA, AA, A, and BBB are High Grade, while bonds rated BB and below are High Yield.
Looking at rated bonds for 1973–89, the authors found a AAA-rated bond paid 43 "basis points" (or 43/100 of a percentage point) over a US Treasury bond (so that it would yield 3.43% if the Treasury yielded 3.00%). A CCC-rated "junk" (or speculative) bond, on the other hand, paid over 7% (724 basis points) more than a Treasury bond on average ...
Diversification: Corporate bonds come in a wide variety of types, depending on maturity (short, medium and long) and rating quality (investment-grade or high-yield). A bond ETF allows you to buy ...
It has an "ETF of ETF" structure whereby it invests in three other Vanguard ETFs, all of which hold no corporate bonds with a lower than (low default risk) "BBB-" rating. If corporate bond yields ...