Investment grade corporate bonds, or high-grade bonds, are those that are assigned a lower risk of default and receive higher ratings by credit agencies — i.e., bonds rated by Moody’s or BBB by S&P Global Ratings and Fitch Ratings. These bonds are also generally issued at lower yields compared to lower rated bonds, but higher yields than government bonds. Investment grade corporate portfolios can be invested entirely in USD-denominated corporate debt, or more broadly in corporate debt denominated in other developed market currencies. Representative indices include the Bloomberg Barclays US Corporate Investment Grade Index and the Bloomberg Barclays Global Aggregate Corporate Bond Index.
As credit markets and regions remain differentiated by distinct secular and cyclical trends and characteristics, despite global integration, inefficiencies can be exploited and opportunities uncovered via cross-market analysis and sector specific allocation.
Investment grade corporate bonds can serve as an important anchor to a diversified
portfolio, offering investors various benefits:
- High quality portfolio for investors seeking steady income and yield, with relatively lower default risk
- Attractive risk-adjusted returns that capture upside from fundamental mis-valuations and technical market dislocations while minimizing credit losses
- Income and yield with relatively lower risk than equities or high yield corporate debt
- Alpha sourced from both industry sector rotation and active security selection
- Downside risk management that can protect against periods of weak economic growth or outsized market volatility
Stone Harbor has been managing investment grade corporate debt as part of broader
mandates since 1993, and launched a standalone track record dating back to 2013.
Stone Harbor offers a flexible range of options within our investment grade corporate
strategy, including a dedicated investment grade corporate strategy via separate
accounts or pooled vehicles, or exposure through broader investment grade or
multi-sector credit strategies.