Investment grade bonds are bonds which are rated BBB- or higher by S&P and Fitch or Baa3 or higher by Moody's. These ratings are indicators of default risk on a particular bond issue -- with higher rating suggesting lower risk. Bonds which fall below the investment grade threshold are known as speculative bonds (also known as high yield bonds, non-investment grade bonds or junk bonds) The following table lists the ratings which would qualify an issue as investment grade.
|Higher medium Grade||A1||A+||A+|
|Higher medium Grade||A2||A||A|
|Higher medium Grade||A3||A-||A-|
|Lower medium Grade||Baa1||BBB+||BBB+|
|Lower medium Grade||Baa2||BBB||BBB|
|Lower medium Grade||Baa3||BBB-||BBB-|