Investment grade healthcare bonds are issued by pharmaceutical and biotechnology companies, medical device makers, health insurers, hospital operators, and pharmacy and lab chains rated BBB‑/Baa3 or higher. The sector includes some of the strongest credits in the market: Johnson & Johnson is one of two U.S. companies rated AAA by S&P, along with Microsoft.
For investment grade net lease investors, the crossover runs through pharmacies, dialysis centers, labs, and outpatient clinics. Some of those operators are public companies with investment grade bonds, some are rated below investment grade, and many are privately owned with no public rating, so the lease obligor matters as much as the brand. See the investment grade bonds hub, the healthcare real estate guide, and the CVS bonds vs. NNN analysis.
Healthcare Bond Yields Today
Most health care issuers are rated in the AA, 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 Healthcare Credit
Patent expirations and pipelines. Drug makers’ credit depends on replacing revenue from products losing patent protection. Debt-funded acquisitions are the usual answer: Pfizer sold $31 billion of bonds in May 2023 to fund its Seagen acquisition, and Amgen sold $24 billion in February 2023 for Horizon Therapeutics.
Medicare drug price negotiation. Under the Inflation Reduction Act, CMS negotiated prices for the first 10 selected drugs, effective January 1, 2026. CMS reported the negotiated prices were 38 to 79 percent below 2023 list prices and estimated about 22 percent net savings compared with 2023 spending. Later rounds add more drugs.
Reimbursement for providers. Hospital, dialysis, and lab operators depend on Medicare, Medicaid, and commercial insurer rates. At DaVita, government payors account for about two-thirds of U.S. dialysis revenue, so reimbursement changes matter more than volume.
Ownership changes. Walgreens Boots Alliance was taken private by Sycamore Partners on August 28, 2025 and has no public agency rating on file in our database. Concentra became an independent public company after Select Medical completed its spinoff on November 25, 2024; it is not part of UnitedHealth’s Optum.
Litigation. Product liability and opioid litigation can lead to large settlements that affect leverage.
Healthcare Issuers That Are Also NNN Tenants
These health care operators lease pharmacies, clinics, dialysis centers, and labs that trade as net lease investments. The table shows each one’s rating as it stands in our database, including operators rated below investment grade and those with no public rating. 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) |
|---|---|---|---|---|
| CVS | BBB | Baa3 | 6.19% (BBB) | 6.50% (168) |
| Walgreens (Walgreens Boots Alliance, Inc.) | n/a | NR | not rated | 7.50% (372) |
| Labcorp | BBB | Baa2 | 6.19% (BBB) | fewer than 5 listings |
| Quest Diagnostics | BBB+ | Baa1 | 6.19% (BBB) | fewer than 5 listings |
| HCA Healthcare | BBB | n/a | 6.19% (BBB) | fewer than 5 listings |
| Encompass Health | BB | Ba2 | 7.03% (BB) | fewer than 5 listings |
| Fresenius Medical Care | BBB- | Baa3 | 6.19% (BBB) | fewer than 5 listings |
| DaVita | BB | Ba2 | 7.03% (BB) | 6.75% (43) |
| Concentra | BB | n/a | 7.03% (BB) | 6.25% (6) |
| Aspen Dental | B- | n/a | 8.27% (B) | 6.35% (18) |
| Heartland Dental | B | B2 | 8.27% (B) | 5.35% (68) |
| Pacific Dental Services | B | B1 | 8.27% (B) | fewer than 5 listings |
| MyEyeDr | CCC+ | B3 | 17.02% (CCC) | 6.84% (5) |
| Banfield Pet Hospital (Mars, Incorporated) | A | n/a | 5.84% (A) | fewer than 5 listings |
| VCA Animal Hospitals (Mars Inc.) | A | n/a | 5.84% (A) | 6.88% (6) |
| BioLife Plasma Services (Takeda Pharmaceutical Company Limited) | BBB+ | Baa1 | 6.19% (BBB) | fewer than 5 listings |
| CSL Plasma (CSL Limited) | A- | A3 | 5.84% (A) | fewer than 5 listings |
| Octapharma Plasma (Octapharma AG) | NR | NR | not rated | fewer than 5 listings |
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 8, 2026. Shaded rows are not investment grade or not rated.
Bond Index Yield vs. NNN Cap Rate
For health care 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 |
|---|---|---|---|---|
| CVS Bonds vs. NNN analysis | BBB / Baa3 | 6.19% (BBB) | 6.50% (168) | +31 bps |
| DaVita | BB / Ba2 | 7.03% (BB) | 6.75% (43) | −28 bps |
| Aspen Dental | B- / n/a | 8.27% (B) | 6.35% (18) | −192 bps |
Showing 3 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 on active listings InvestmentGrade.com tracks, as of October 8, 2026; asking cap rates are not closed-sale cap rates. Spread is the median asking cap rate minus the index yield. Ratings are corporate issuer ratings; 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: Fresenius Medical Care, Labcorp. Not shown because there is no verified public agency rating: Walgreens.
The full tenant-by-tenant comparison is in the bond-to-NNN spread table.
Other Major Healthcare Bond Issuers
Large health care 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) |
|---|---|
| Pharmaceuticals and biotech | Johnson & Johnson (JNJ); Eli Lilly (LLY); Merck (MRK); Pfizer (PFE); AbbVie (ABBV); Bristol-Myers Squibb (BMY); Amgen (AMGN); Gilead Sciences (GILD) |
| Medical devices and tools | Abbott Laboratories (ABT); Medtronic (MDT); Stryker (SYK); Boston Scientific (BSX); Thermo Fisher Scientific (TMO); Danaher (DHR) |
| Health insurers | UnitedHealth Group (UNH); Elevance Health (ELV); Cigna Group (CI); Humana (HUM) |
Healthcare Bond Risks
- Drug pricing. Medicare negotiation and other pricing policies reduce revenue on affected drugs.
- Patent cliffs. Revenue from blockbuster drugs falls quickly after exclusivity ends.
- Leverage from acquisitions. Large acquisitions are usually funded with new bonds.
- Reimbursement. Provider credit depends on government and commercial payment rates.
- Operator concentration in net lease. Dental, vision, veterinary, and plasma chains are often privately owned; underwrite the operator’s financial statements and any guarantee.
Frequently Asked Questions
What are investment grade healthcare bonds?
Bonds rated BBB‑/Baa3 or higher issued by drug makers, device makers, insurers, hospital operators, and pharmacy and lab chains.
How does Medicare drug price negotiation affect healthcare bonds?
It lowers revenue on the selected drugs. For the first 10 drugs, effective January 1, 2026, CMS reported negotiated prices 38 to 79 percent below 2023 list prices and about 22 percent estimated net savings. The credit effect depends on how much of an issuer’s revenue comes from selected drugs.
Is Walgreens investment grade?
Walgreens was taken private by Sycamore Partners on August 28, 2025 and has no public agency rating on file in our database. Underwrite Walgreens leases on the tenant entity’s financial information and any guarantee.
Are dental, urgent care, and veterinary tenants rated?
It varies by operator. Some are owned by private equity, some by large private companies such as Mars (Banfield and VCA), and some, such as Concentra, are public. Some have ratings below investment grade on their debt and others have no public rating. Each operator’s tenant page shows what is on file.
What is the bond-to-NNN spread for CVS?
Today the median asking cap rate on CVS listings is 6.50% against a BBB index yield of 6.19%, a spread of +31 bps. See the CVS bonds vs. NNN analysis.
Own or Buying Healthcare Net Lease Property?
If you own a pharmacy, dialysis, lab, or medical outpatient 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.
