Investment-Grade Bond

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A bond issued by a highly rated company (as rated by a credit-rating agency such as Fitch Ratings, Moody's, or Standard & Poor's) that has a very low risk of default, and that also typically pays a relatively low coupon rate to the bondholders. People buy investment grade bonds because they are relatively safe investments, not because they are spectacular investments. Contrast them with noninvestment-grade bonds, also known as junk bonds.