Investment grade industrial bonds are issued by railroads, aerospace and defense contractors, machinery makers, conglomerates, waste companies, and parcel carriers rated BBB‑/Baa3 or higher. Their earnings follow economic activity, government spending, and capital investment cycles.
For investment grade net lease investors, the crossover is logistics: FedEx, UPS, and Amazon lease distribution and service centers, and paint and coatings maker Sherwin-Williams leases thousands of stores. See the FedEx bonds vs. NNN analysis, the Sherwin-Williams bonds vs. NNN analysis, and the investment grade bonds hub.
Industrial Bond Yields Today
Most industrial 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 Industrial Credit
Economic and capital spending cycles. Machinery and freight volumes rise and fall with the economy, so agencies rate these companies on performance through downturns.
Defense budgets and backlogs. Defense contractors have long order backlogs funded by government budgets, which supports stable ratings.
Corporate separations. 3M completed the spinoff of Solventum, its health care business, on April 1, 2024, and General Electric completed its separation into GE Aerospace and GE Vernova on April 2, 2024. Separations change which entity owes the debt and how it is rated.
Parcel volumes and network costs. FedEx and UPS depend on shipping volumes and on keeping network costs in line; large customers shifting volume can move results.
Railroads. Class I railroads, including BNSF, a Berkshire Hathaway subsidiary, have high margins and long-lived assets, which supports strong ratings.
Industrial Issuers That Are Also NNN Tenants
These logistics and industrial companies lease facilities that trade as net lease investments. Logistics leases are often signed by an operating subsidiary, such as FedEx Ground Package System, so check whether the rated parent guarantees the lease. 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) |
|---|---|---|---|---|
| FedEx | BBB | Baa2 | 6.19% (BBB) | 6.65% (11) |
| UPS | A | n/a | 5.84% (A) | fewer than 5 listings |
| Amazon | AA | A1 | 5.80% (AA) | fewer than 5 listings |
| XPO | BB+ | n/a | 7.03% (BB) | fewer than 5 listings |
| Sherwin-Williams | BBB | Baa2 | 6.19% (BBB) | 6.00% (34) |
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 |
|---|---|---|---|---|
| FedEx Bonds vs. NNN analysis | BBB / Baa2 | 6.19% (BBB) | 6.65% (11) | +46 bps |
| Sherwin-Williams Bonds vs. NNN analysis | BBB / Baa2 | 6.19% (BBB) | 6.00% (34) | −19 bps |
Showing 2 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: UPS, Amazon.
The full tenant-by-tenant comparison is in the bond-to-NNN spread table.
Other Major Industrial Bond Issuers
Other large industrial bond issuers. 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) |
|---|---|
| Railroads | Union Pacific (UNP); BNSF Railway (Berkshire Hathaway subsidiary); CSX (CSX); Norfolk Southern (NSC) |
| Aerospace and defense | Lockheed Martin (LMT); RTX (RTX); General Dynamics (GD); Northrop Grumman (NOC); GE Aerospace (GE); Boeing (BA) |
| Machinery and diversified | Caterpillar (CAT); Deere (DE); Cummins (CMI); Honeywell (HON); Emerson Electric (EMR); 3M (MMM) |
| Waste and environmental | Waste Management (WM); Republic Services (RSG) |
Industrial Bond Risks
- Cyclical demand. Industrial volumes fall in recessions.
- Execution and program risk. Aerospace programs can run over budget or behind schedule.
- Tariffs and supply chains. Trade policy changes input costs and customer demand.
- Obligor in logistics leases. Many facilities are leased by subsidiaries without a parent guarantee.
Frequently Asked Questions
What are investment grade industrial bonds?
Bonds rated BBB‑/Baa3 or higher issued by railroads, aerospace and defense, machinery, conglomerates, waste companies, and parcel carriers.
Are any industrial issuers rated AA?
A few industrial issuers are rated in the AA category by at least one agency, while most are A or BBB. Ratings differ by agency and entity, so check the issuer’s current rating rather than relying on a sector count.
Who is the tenant on a FedEx facility lease?
Often an operating subsidiary such as FedEx Ground Package System, Inc. Check whether FedEx Corporation guarantees the lease before applying its rating of BBB from S&P.
What is the bond-to-NNN spread for FedEx?
Today the median asking cap rate on FedEx listings is 6.65% against a BBB index yield of 6.19%, a spread of +46 bps. Spreads vary by tenant; the table above shows each one.
Own or Buying Industrial Net Lease Property?
If you own a logistics, service center, or industrial 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.
