CVS Health occupies a critical position in the bond-to-NNN spread analysis: it is the largest pharmacy NNN tenant, one of the most widely held investment grade bond issuers, and currently sits at the floor of investment grade at Moody’s (Baa3). Its bonds yield approximately 5.50%, reflecting the market’s awareness of the credit pressure, while NNN properties trade at 6.00% to 6.50% cap rates. The resulting spread of 50 to 100 basis points is narrower than the dollar store or auto parts sectors but remains meaningfully positive, and the after-tax comparison is dramatically more favorable for NNN.
For the full 21-company comparison, see the Bond-to-NNN Spread Anchor Page. For the complete CVS tenant analysis, see the CVS Credit Rating and NNN Cap Rate page.
CVS Health Credit Profile
| Metric | Details |
|---|---|
| S&P Rating / Outlook | BBB / Negative |
| Moody’s Rating / Outlook | Baa3 / Stable |
| Fitch Rating / Outlook | BBB / Negative |
| Investment Grade Status | Investment Grade (floor of IG at Moody’s) |
| Ticker | NYSE: CVS |
| US Store Count | ~9,700 pharmacy locations |
| Annual Revenue | ~$360 billion (FY2024, including Aetna and Caremark) |
The Spread: CVS Bonds vs. NNN
| Metric | CVS Corporate Bond | CVS NNN Property |
|---|---|---|
| Yield / Cap Rate | ~5.50% (5-10yr senior unsecured) | 6.00% to 6.50% |
| Nominal Spread vs. Bond | Baseline | +50 to +100 bps |
| Minimum Investment | ~$1,000 (via broker) | ~$2,500,000 to $6,000,000 |
| Liquidity | Sells in seconds | 60 to 90 day sale cycle |
| Income Taxation | Ordinary income (up to ~45.8%) | Sheltered by depreciation |
| 1031 Exchange Eligible | No | Yes |
| Depreciation Deduction | None | 39-year straight line + cost segregation |
| Building Size | N/A | 10,000 to 14,000 SF |
| Typical NNN Lease | N/A (debt instrument) | 25-year original term, NNN, corporate guarantee |
Bond yield is approximate, derived from CVS Health’s BBB/Baa3 rating-tier position relative to the ICE BofA BBB US Corporate Index (~5.29% as of March 19, 2026, per FRED). CVS trades slightly wide of the index due to Negative S&P and Fitch outlooks. NNN cap rates from InvestmentGrade.com IG 180 database. This is not investment advice.
Why CVS Requires Special Attention
CVS is different from every other company in this spread series because it sits at the floor of investment grade at Moody’s (Baa3) with Negative outlooks from both S&P and Fitch. One more notch of downgrade at Moody’s would push CVS into high-yield territory, triggering forced selling by institutional bond portfolios with IG-only mandates and potentially widening NNN cap rates across 9,700+ locations.
For bond investors, this credit pressure is already priced: CVS bonds yield approximately 5.50%, roughly 20 to 25 basis points wide of the BBB index average, reflecting the downgrade risk premium. For NNN investors, cap rates of 6.00% to 6.50% similarly reflect the market’s caution about CVS’s credit trajectory. What both markets agree on is that CVS is currently investment grade. Where they differ is how much premium each market demands for the uncertainty, and that difference creates the 50 to 100 basis point spread.
The CVS Paradox: $360 Billion Revenue, Baa3 Rating
CVS Health generates more annual revenue than any other company in the IG 180 database. Its $360 billion top line encompasses CVS Pharmacy retail stores, Caremark pharmacy benefit management (the largest PBM in the U.S.), Aetna health insurance, and the growing Oak Street Health primary care platform. The Baa3 rating does not reflect a failing business. It reflects the leverage from the $70 billion Aetna acquisition in 2018, which loaded the balance sheet with acquisition debt that the company is still working to pay down.
For NNN investors, this distinction matters. A CVS pharmacy in a strong suburban corridor, backed by a 25-year original lease with 10+ years remaining and the corporate guarantee of a $360 billion healthcare conglomerate, is a fundamentally different risk profile than the Baa3 rating alone might suggest. The NNN investor who understands CVS’s deleveraging trajectory and diversified revenue model can capture the 50 to 100 basis point spread while holding an asset backed by a company that generates over $10 billion in annual free cash flow.
CVS vs. Walgreens: The Pharmacy NNN Divergence
The divergence between CVS and Walgreens is the most dramatic credit story in the IG 180 database. CVS maintains investment grade status (BBB / Baa3) while Walgreens went private via Sycamore Partners’ leveraged buyout and no longer carries public credit ratings. CVS NNN cap rates (6.00% to 6.50%) are 200+ basis points tighter than Walgreens (8.50% to 9.50%+), reflecting the massive credit quality gap. Bond investors who held Walgreens debt saw spreads widen dramatically before the take-private. CVS bondholders have experienced tighter spreads as the company’s deleveraging progressed. For NNN investors evaluating pharmacy real estate, CVS is the only remaining investment grade option in the sector.
As of Q1 2026, the nominal spread is approximately 50 to 100 basis points. CVS bonds yield roughly 5.50% (slightly wide of the BBB index due to Negative outlooks at S&P and Fitch) while NNN properties trade at 6.00% to 6.50% cap rates. The after-tax comparison favors NNN by 250 to 350+ basis points when depreciation is factored in.
CVS sits at Baa3 at Moody’s (floor of investment grade) with Negative outlooks from S&P and Fitch. The company is actively deleveraging and has committed to maintaining investment grade status. Its $10+ billion annual free cash flow provides meaningful capacity to reduce debt. However, NNN investors should monitor credit rating actions closely. A downgrade to Ba1 (high yield) would likely widen cap rates by 100 to 200 basis points across the CVS NNN portfolio.
Both sit at BBB / Baa3, but CVS bonds yield approximately 20 basis points more because S&P and Fitch have Negative outlooks on CVS (signaling potential downgrade) while Dollar General’s S&P outlook is Stable. The bond market prices in the directional risk, not just the current rating. The NNN market shows a similar pattern: CVS cap rates (6.00% to 6.50%) are tighter than Dollar General (6.75% to 7.75%) because CVS stores are located in stronger suburban markets with better re-tenanting alternatives.
Considering CVS NNN?
We source CVS NNN properties nationally. On the majority of transactions, the listing broker pays a cooperating commission, so there is typically no separate fee to you as the buyer.
Find It — CVS NNN with long remaining lease terms in strong suburban corridors.
Fund It — BBB/Baa3 credit. Lenders underwrite CVS daily; competitive terms available.
Exit It — CVS is one of the most recognized NNN brands. Deep buyer demand at 10+ year terms.
Exchange It — CVS price points ($2.5M to $6M) fit mid-range 1031 exchanges.
