# Investment Grade

*Markets & Instruments — Finicade finance glossary*

Investment grade means a credit rating of BBB−/Baa3 or better — the threshold at which most institutional mandates are allowed to buy. The line is arbitrary and enormously consequential: a downgrade from BBB− to BB+ forces mechanical selling by funds that cannot hold sub-investment-grade debt, so spreads gap far more than the change in fundamentals warrants. The build-up of debt clustered just above the line is a standing systemic concern.

**Also known as:** IG, investment grade bond, BBB rated

**Related terms:** [Credit Rating](https://finicade.com/glossary/credit-rating), [High-Yield Bond](https://finicade.com/glossary/high-yield-bond), [Fallen Angel](https://finicade.com/glossary/fallen-angel), [Credit Spread](https://finicade.com/glossary/credit-spread), [Corporate Bond](https://finicade.com/glossary/corporate-bond)

Source: https://finicade.com/glossary/investment-grade