What is the minimum credit rating for bonds to be classified as investment grade?

The minimum credit rating for bonds to be classified as investment grade is indeed characterized by ratings that begin from a certain level, typically recognized across the major credit rating agencies. The correct classification starts at the lowest investment grade ratings, which is understood to be BBB- from Standard & Poor's and Baa3 from Moody's.

Bonds with a rating of BBB- or Baa3 indicate that they have a relatively low credit risk, making them suitable for many institutional investors who are required to maintain investment-grade portfolios. This classification is important as it signifies to investors a level of creditworthiness that allows for greater confidence in bond issuances, ultimately affecting yields and attractiveness in the market.

In contrast, ratings below this threshold, such as BB+ or Ba1 and lower (which fall into the high-yield or junk bond categories), indicate a higher level of risk, and thus, they do not meet the investment grade criteria. This clarity in classification is critical for investors making decisions based on risk tolerance and investment strategy.