Module III· DCM — Investment Grade & Senior DebtBasic
Question
What is the difference between investment grade and high yield?
Answer
Investment grade issuers have stronger credit quality, typically BBB- / Baa3 or higher. High yield issuers are below investment grade and pay higher spreads to compensate for higher default risk. IG focuses more on ratings, duration, liquidity, and relative value; HY focuses more on leverage, covenants, security, downside recovery, and sponsor / restructuring risk.