Corporate Bonds


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The Index is rebalanced on the last calendar day of the month, based on information available up to and including the third business day before the last business day of the month. Issues that meet the qualifying criteria are included in the Index for the following month. Issues that no longer meet the criteria during the course of the month remain in the Index until the next month-end rebalancing at which point they are removed from the Index.

We will reply as soon as possible. If you have not received a response within two business days, please send your inquiry again or call Jan 10, Percent , Not Seasonally Adjusted. The difference between rates for first-class government bonds and investment-grade bonds is called investment-grade spread.

The range of this spread is an indicator of the market's belief in the stability of the economy. The higher these investment-grade spreads or risk premiums are, the weaker the economy is considered. Until the early s, bond credit ratings agencies were paid for their work by investors who wanted impartial information on the credit worthiness of securities issuers and their particular offerings. Securities issuers have been accused of "shopping" for the best ratings from these three ratings agencies, in order to attract investors, until at least one of the agencies delivers favorable ratings.

This arrangement has been cited as one of the primary causes of the subprime mortgage crisis which began in , when some securities, particularly mortgage-backed securities MBSs and collateralized debt obligations CDOs rated highly by the credit ratings agencies, and thus heavily invested in by many organizations and individuals, were rapidly and vastly devalued due to defaults, and fear of defaults, on some of the individual components of those securities, such as home loans and credit card accounts.

Other countries are beginning to mull the creation of domestic credit ratings agencies to challenge the dominance of the "Big Three", for example in Russia, where the ACRA was founded in Municipal bonds are instruments issued by local, state, or federal governments in the United States.

The historical default rate for municipal bonds is lower than that of corporate bonds. The Municipal Bond Fairness Act HR , [8] introduced September 9, , included the following table giving historical bond default rates for municipal versus corporate bonds by rating and rating agency. A potential misuse of historic default statistics is to assume that historical average default rates represent the " probability of default " of debt in a particular rating category.

From Wikipedia, the free encyclopedia. Redirected from Investment grade. Council on Foreign Relations. Retrieved 29 May Please review the copyright information in the series notes before sharing.

Original issue zero coupon bonds, "global" securities debt issued simultaneously in the eurobond and US domestic bond markets , a securities and pay-in-kind securities, including toggle notes, qualify for inclusion in the Index. Callable perpetual securities qualify provided they are at least one year from the first call date. Fixed-to-floating rate securities also qualify provided they are callable within the fixed rate period and are at least one year from the last call prior to the date the bond transitions from a fixed to a floating rate security.

Index constituents are capitalization-weighted based on their current amount outstanding. With the exception of U. Accrued interest for U. Cash flows from bond payments that are received during the month are retained in the index until the end of the month and then are removed as part of the rebalancing.