Speculative Grade (Bonds)

A bond that is speculative-grade has a rating lower than Baa from Moody's Investors Service, a rating lower than BBB from Standard & Poor's or both. Nonrated bonds are also considered speculative-grade.

Bonds with ratings of Baa, BBB or higher are termed investment-grade. Many institutional investors have policies that require them to limit their bond investments to investment-grade issues.