Credit · Core
Investment Grade
Investment grade is a credit rating of BBB− / Baa3 or better — a regulatory and mandate bucket, not a promise of no loss.
Definition
S&P/Fitch BBB− and Moody’s Baa3 are the floor. Fallen angels drop out; rising stars enter. Index and insurance capital rules make the line a cliff for flows.
Why it matters
The BBB bucket is huge. A wave of downgrades is a mechanical seller into HY.
Case
2020 fallen angels (Ford, Occidental) left IG indexes and entered HY. The rating line was a flow event.
How to read it
Rating outlook, leverage, and how much of the index sits at BBB. The label is a threshold, not a spread.
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