Which financing option is more common for investment grade companies?

The financing option that is more common for investment grade companies is unsecured debt offerings. Investment grade companies typically have strong credit ratings, which allows them to issue debt without the need to provide collateral. This type of financing is attractive because it can often be issued at lower interest rates compared to secured debt, as there is lower perceived risk for investors. Unsecured debt offerings enable these companies to raise capital while maintaining their existing assets for operational purposes rather than tying them up as security against the debt.

In contrast, secured financings, while they provide lower interest rates due to the collateral backing, are generally less common among investment-grade companies who have better access to unsecured debt markets. Similarly, sale-leaseback transactions and equity buybacks cater to different financial strategies and needs that may not align with the typical approaches of investment-grade firms. These companies often have the flexibility to raise funds through the unsecured debt markets without having to provide the collateral that secured financing requires.