Investment Grade Corporate Bonds
Issued by large corporations, these corporate bonds are often
termed "investment grade" because they are issued by
very credit-worthy companies with high credit ratings. Standard & Poor’s
assigns credit ratings of AAA, AA, A or BBB to investment grade
bonds.
Investment grade corporate bonds offer a slightly higher stream
of income than government bonds because they are not guaranteed
by a government. The difference in rates (interest-rate spread)
between corporate and government bonds generally rises and falls
as a result of investor confidence, investors' willingness to take
risks, the outlook for the economy and growth in corporate profits.
(Interest-rate spread, or simply spread, is used
to describe the difference in rates between different types of
bonds.)
With investment grade corporate bonds, investors assume the risk
that the issuing company might not be able to make its interest
and principal payments. The risk for investment grade corporate
bonds, however, tends to be very low.
To learn more about fixed-income investing, please continue by choosing one of the following
topics:
Also visit Bonds versus GICs to see how bonds and guaranteed investment
certificates (GICs) compare against one another.
To learn about individual RBC Funds and how they can address your
investment objectives, access our Fund
Updates. If you are ready to invest now, contact your advisor
or explore the options
available to invest with RBC Financial Group.
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