Speculative-Grade Bond

Speculative-grade bond

Bond rated Ba or lower by Moody's, or BB or lower by S&P, or an unrated bond.

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Speculative-Grade Bond

A bond with a low rating. Bonds rated less than Baa3 by Moody's or BBB- by S&P or Fitch are considered low-grade bonds. They have higher yields than other bonds because they have a higher risk of default on the part of the issuer. Low-grade bonds are considered sufficiently high-risk that the law does not allow banks to invest in them. They are also called high-yield bond and, informally, junk bonds.