Jurisdiction(s):
United Kingdom

Key definition

Speculative grade definition

What does Speculative grade mean? Speculative grade describes an issuer or debt instrument assessed as higher credit risk than investment grade by a credit rating agency (for example, S&P, Moody’s or Fitch). It corresponds to ratings below investment grade (for example, BB+ or lower at S&P/Fitch and Ba1 or lower at Moody’s) and is also called non‑investment grade, high‑yield or “junk”. The term is not defined in UK or Irish legislation or case law; it is a market expression used across financing, capital markets and funds. In practice it matters for eligibility under investment policies and regulatory requirements, for pricing and disclosure in prospectuses and offering...

High yield bonds: practical guide to investors, issuers, market history, key terms and covenants, offering and listing considerations, leveraged loan comparisons, bridging finance and ESG

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Practice notes

What does this Practice Note cover?

This Practice Note introduces high yield bonds. It addresses:

the types of Investors in these securities, such as institutional investors and funds
the motivations for investing, including benefits versus loans (for example, the potential for higher returns)
the issuers of these instruments, typically corporates with sub-investment grade credit ratings
an outline of the high yield bond market, covering its size, principal participants and usual features

What are high yield bonds?

Bonds are capital markets instruments that constitute a form of debt security. For more on capital markets and bond issues, see Practice Note: Key features of the debt capital markets. High yield bonds—also known as junk bonds or Speculative grade bonds—generally provide investors with higher rates of return than other Corporate bonds because they are considered riskier Investments. High yield bonds are typically rated below investment grade (Ba1/BB+ and below) at the point of issue by one or more of the major rating agencies (see Practice Note: Credit ratings)...

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Web page updated on 21/05/2026

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