An importance different between investment grade bonds and speculative bonds, as categorized by Moody's and S&P is:

1. Speculative bonds must have a low or zero coupon rate.

2. Investment grade bonds must be of short maturity only.

3. Public pension funds may invest in investment grade bonds but not in speculative bonds.

4. Investment grade bonds must have a rating of at least A

5. Speculative bonds cannot have a rating that is better than C