Net lease glossary
Investment Grade
A credit rating of BBB- or higher from S&P or Fitch, or Baa3 or higher from Moody's, indicating relatively low default risk.
Investment grade describes a company whose debt is rated BBB- or above by S&P Global or Fitch, or Baa3 or above by Moody's. In net lease, investment-grade tenants such as large pharmacy, dollar store, grocery, or home improvement chains command lower cap rates because investors view their rent as more secure. A rating applies to a specific legal entity, so investors should confirm the rated entity is the one actually obligated on the lease.