Investment grade consumer discretionary bonds are issued by home improvement retailers, restaurant companies, auto parts and specialty retailers, automakers, and travel companies rated BBB‑/Baa3 or higher. Their revenue depends on consumer spending, but the largest issuers have kept investment grade ratings through several cycles.
Many of the most traded investment grade net lease tenants are in this sector: Home Depot, Lowe’s, McDonald’s, Starbucks, AutoZone, O’Reilly, Tractor Supply, and Best Buy each have a bond-to-NNN page on this site. The sector also includes many franchised brands whose leases are signed by franchisees, where the parent’s rating does not apply. See the investment grade bonds hub and the bond-to-NNN spread table.
Consumer Discretionary Bond Yields Today
Most consumer discretionary issuers are rated in the A and BBB categories. As of October 1, 2026, the ICE BofA US Corporate index yields by rating category were AA 5.80%, A 5.84%, and BBB 6.19%, and the BB high yield index yielded 7.03%. Individual bonds trade above or below their category depending on maturity and the issuer’s credit. The table updates each business day.
| Index (rating category) | Effective yield | Option-adjusted spread | Spread range since history start |
|---|---|---|---|
| AA | 5.80% | 61 bps | 41 to 73 bps (low Aug 18, 2025; high Apr 7, 2025) |
| A | 5.84% | 73 bps | 59 to 115 bps (low Jan 22, 2026; high Oct 20, 2023) |
| BBB | 6.19% | 106 bps | 92 to 163 bps (low May 29, 2026; high Oct 20, 2023) |
| Investment grade composite | 5.99% | 86 bps | 73 to 133 bps (low Jan 22, 2026; high Oct 20, 2023) |
| BB | 7.03% | 204 bps | 150 to 311 bps (low Aug 28, 2026; high Oct 20, 2023) |
ICE BofA US Corporate (AAA to BBB) and US High Yield (BB to CCC) index effective yields and option-adjusted spreads, from the Federal Reserve Bank of St. Louis (FRED), as of October 1, 2026. The range covers the daily history FRED currently publishes for these series, which begins October 3, 2023. Updated each business day.
What Drives Consumer Discretionary Credit
Consumer spending. Sales of discretionary goods and restaurant meals slow when incomes and confidence fall, so ratings in this sector reflect how well a company held up in past downturns.
Share buybacks funded with debt. Several of the largest issuers return cash to shareholders partly with borrowed money. AutoZone, McDonald’s, and Starbucks report negative shareholders’ equity as a result, which is one reason their ratings sit in the BBB category despite strong businesses.
Franchising. Restaurant and hotel companies earn fees from franchisees. A franchise agreement grants brand rights; it does not make the franchisor the tenant or guarantor of a franchisee’s lease. Apply a franchisor’s rating to a lease only if the rated company signs or guarantees it.
Rated entity and agency coverage. Ratings can differ by agency and by entity. Genuine Parts Company, the parent of NAPA, appears in the table below with the ratings in our database; independently owned NAPA stores are not backed by Genuine Parts unless the lease says so.
Consumer Discretionary Issuers That Are Also NNN Tenants
These retailers and restaurant companies lease stores and pads that trade as net lease investments. The list includes investment grade, below investment grade, and unrated tenants, labeled in each row. Ratings come from our ratings database and update automatically; n/a means no verified rating is on file. A corporate rating applies to a lease only if the rated entity signs or guarantees it.
| Issuer (rated entity) | S&P | Moody’s | Index yield for rating category | NNN median asking cap (listings) |
|---|---|---|---|---|
| The Home Depot | A | A2 | 5.84% (A) | 5.50% (6) |
| Lowe's | BBB+ | Baa1 | 6.19% (BBB) | fewer than 5 listings |
| Tractor Supply | BBB | Baa1 | 6.19% (BBB) | 6.00% (41) |
| Best Buy | BBB+ | A3 | 6.19% (BBB) | 6.58% (6) |
| T.J. Maxx | n/a | n/a | not rated | fewer than 5 listings |
| Ross Dress for Less | A- | n/a | 5.84% (A) | fewer than 5 listings |
| Burlington | BB+ | n/a | 7.03% (BB) | fewer than 5 listings |
| DICK'S Sporting Goods | BBB | Baa2 | 6.19% (BBB) | fewer than 5 listings |
| Ulta Beauty | NR | NR | not rated | fewer than 5 listings |
| Floor & Decor | BB | Ba3 | 7.03% (BB) | fewer than 5 listings |
| Five Below | n/a | n/a | not rated | fewer than 5 listings |
| AutoZone | BBB | Baa1 | 6.19% (BBB) | 5.30% (28) |
| O'Reilly Auto Parts | BBB | Baa1 | 6.19% (BBB) | 6.00% (28) |
| NAPA Auto Parts (Genuine Parts Company) | BBB- | Baa1 | 6.19% (BBB) | 7.00% (12) |
| Advance Auto Parts | BB | n/a | 7.03% (BB) | 7.25% (75) |
| McDonald's | BBB+ | Baa1 | 6.19% (BBB) | 4.00% (43) |
| Starbucks | BBB+ | Baa1 | 6.19% (BBB) | 5.75% (118) |
| Olive Garden (Darden Restaurants, Inc.) | BBB | Baa2 | 6.19% (BBB) | 5.50% (9) |
| LongHorn Steakhouse (Darden Restaurants, Inc.) | BBB | Baa2 | 6.19% (BBB) | 5.50% (20) |
| Chipotle | n/a | n/a | not rated | 5.00% (90) |
| Taco Bell (Yum! Brands, Inc.) | BB+ | Ba2 | 7.03% (BB) | 5.50% (60) |
| Burger King (Restaurant Brands International Inc.) | BB+ | n/a | 7.03% (BB) | 6.25% (69) |
| Popeyes (Restaurant Brands International Inc.) | BB+ | n/a | 7.03% (BB) | 6.00% (72) |
| Wendy's | B+ | n/a | 8.27% (B) | 6.00% (82) |
| Dutch Bros | NR | NR | not rated | 5.40% (98) |
| Chili's | BB+ | n/a | 7.03% (BB) | 5.50% (7) |
Ratings from our ratings database (S&P Global Ratings and Moody’s rating actions and issuer filings); n/a means no verified rating is on file. Index yield is the ICE BofA effective yield for the issuer’s rating category via FRED, as of October 1, 2026, not a quote on the issuer’s own bonds. NNN median is the median asking cap rate on active listings InvestmentGrade.com tracks, as of October 9, 2026. Shaded rows are not investment grade or not rated.
Bond Index Yield vs. NNN Cap Rate
For tenants with enough active listings, the table compares the bond index yield for the tenant’s rating category with the median asking cap rate on its listings.
| Tenant | S&P / Moody’s | Index yield (category) | Median asking cap rate (listings with a cap rate) | Spread |
|---|---|---|---|---|
| The Home Depot Bonds vs. NNN analysis | A / A2 | 5.84% (A) | 5.50% (6) | −34 bps |
| NAPA Auto Parts (rated entity: Genuine Parts Company) Bonds vs. NNN analysis | BBB- / Baa1 | 6.19% (BBB) | 7.00% (12) | +81 bps |
| Best Buy Bonds vs. NNN analysis | BBB+ / A3 | 6.19% (BBB) | 6.58% (6) | +39 bps |
| O'Reilly Auto Parts Bonds vs. NNN analysis | BBB / Baa1 | 6.19% (BBB) | 6.00% (28) | −19 bps |
| Tractor Supply Bonds vs. NNN analysis | BBB / Baa1 | 6.19% (BBB) | 6.00% (41) | −19 bps |
| Starbucks Bonds vs. NNN analysis | BBB+ / Baa1 | 6.19% (BBB) | 5.75% (118) | −44 bps |
| AutoZone Bonds vs. NNN analysis | BBB / Baa1 | 6.19% (BBB) | 5.30% (28) | −89 bps |
| McDonald's Bonds vs. NNN analysis | BBB+ / Baa1 | 6.19% (BBB) | 4.00% (43) | −219 bps |
| Advance Auto Parts | BB / n/a | 7.03% (BB) | 7.25% (75) | +22 bps |
| Burger King (rated entity: Restaurant Brands International Inc.) | BB+ / n/a | 7.03% (BB) | 6.25% (69) | −78 bps |
| Popeyes (rated entity: Restaurant Brands International Inc.) | BB+ / n/a | 7.03% (BB) | 6.00% (72) | −103 bps |
| Taco Bell (rated entity: Yum! Brands, Inc.) | BB+ / Ba2 | 7.03% (BB) | 5.50% (60) | −154 bps |
| Wendy's | B+ / n/a | 8.27% (B) | 6.00% (82) | −227 bps |
Showing 13 tenants. Index yield is the ICE BofA effective yield index for the tenant’s rating category (US Corporate AAA, AA, A or BBB index; US High Yield BB, single-B or CCC and lower index), using the S&P rating, or the Moody’s equivalent where S&P does not rate, from the Federal Reserve Bank of St. Louis (FRED), as of October 1, 2026. It is an index average, not a quote on the company’s own bonds. Median asking cap rate is the median of asking cap rates (stated, or computed from stated income and price when no rate is stated) on active listings InvestmentGrade.com tracks, listings last observed October 5, 2026; asking cap rates are not closed-sale cap rates. Spread is the median asking cap rate minus the index yield. Ratings are the agency ratings in our ratings database for the entity shown; the rating type (for example issuer, senior unsecured debt, long-term debt or revenue bond ratings) varies by company. The entity that signs or guarantees a given lease can differ, so confirm the lease obligor. Shaded rows are below investment grade. NR means the agency does not rate the entity; n/a means no verified rating is on file. Not shown because fewer than 5 active listings with a published cap rate were observed: Lowe's.
The full tenant-by-tenant comparison is in the bond-to-NNN spread table.
Other Major Consumer Discretionary Bond Issuers
Large consumer discretionary bond issuers that rarely appear as net lease tenants. This roster does not show ratings, which change; confirm the current rating with S&P, Moody’s, or Fitch or the issuer’s investor relations site.
| Subsector | Issuers (ticker) |
|---|---|
| Autos and auto finance | Toyota Motor Credit; American Honda Finance; General Motors (GM) |
| Travel and lodging | Booking Holdings (BKNG); Marriott International (MAR) |
| Apparel and online retail | Nike (NKE); eBay (EBAY) |
Consumer Discretionary Bond Risks
- Consumer slowdown. Discretionary sales fall first in a recession.
- Leverage policy. Debt-funded buybacks can push ratings down if earnings weaken.
- Franchisee credit. Many restaurant and hotel properties are leased to franchisees whose credit is weaker than the brand’s.
- E-commerce and format change. Store-based retailers need formats that hold up against online competition.
- Tariffs. Imported goods and parts raise costs for retailers and automakers.
Frequently Asked Questions
What are investment grade consumer discretionary bonds?
Bonds rated BBB‑/Baa3 or higher issued by retailers, restaurant companies, automakers, and travel companies whose sales depend on discretionary spending.
Does a hotel or restaurant franchisor’s rating back a franchisee’s lease?
No, not by itself. A franchise agreement grants the right to use the brand. The franchisor’s rating applies to a lease only if the franchisor or another rated entity is the tenant or a guarantor.
Why are McDonald’s and Starbucks rated BBB rather than higher?
Both run strong businesses but have chosen to carry more debt, partly to fund share buybacks, and both report negative shareholders’ equity. Agencies weigh that leverage against their cash flow.
What is the bond-to-NNN spread for McDonald’s?
Today the median asking cap rate on McDonald’s listings is 4.00% against a BBB index yield of 6.19%, a spread of −219 bps. Many McDonald’s listings are ground leases, which ask lower cap rates and give the landlord no building to depreciate.
Own or Buying Consumer Discretionary Net Lease Property?
If you own a retail, restaurant, or auto parts net lease property with maturing debt or are weighing a sale, we can review refinance and sale options and find buyers among private investors, family offices, and 1031 exchange buyers.
On the majority of NNN transactions, the listing broker pays a cooperating commission, so there is typically no separate fee to you as the buyer for professional representation.
Find it: on market and off market net lease properties, sourced and underwritten for your criteria.
Fund it: acquisition, refinance, and recapitalization financing through our lender relationships.
Exit it: a buyer pool that includes institutions, family offices, and 1031 exchange buyers.
Exchange it: 1031 exchanges into or out of net lease property, run against the deadlines.
Other Sector Deep Dives
Educational content only. InvestmentGrade.com is a commercial real estate brokerage and educational publisher. We do not sell, broker, underwrite, or solicit any bonds, securities, or investment products. Yields, ratings, and prices referenced fluctuate continuously and are sourced from public market data as of the date noted. Nothing on this page constitutes investment advice, an offer to sell, or a solicitation to buy any security. Consult a licensed broker-dealer, registered investment advisor, or tax professional before making any investment decision. For SEC investor education, visit investor.gov.
