Non-Investment Grade
Private Credit glossary · Private Credit Fundamentals
Definition
Debt rated below BBB-/Baa3 by rating agencies. All middle-market direct loans are non-investment grade. Also called sub-investment grade or speculative grade.
Non-Investment Grade in plain English
Rating agencies grade a borrower's debt like a report card for 'how likely are they to pay us back?' The dividing line is BBB-/Baa3: anything at or above that is 'investment grade' (safe, boring), and anything below is 'non-investment grade' — riskier, so it has to pay lenders a higher interest rate to make up for it. It's bluntly nicknamed 'speculative grade' or even 'junk.' Nearly all loans to mid-sized companies fall below the line, which isn't a scandal — it just means the lender is being paid extra to take on real risk.
Practice Non-Investment Grade
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