Generally they are bonds that are judged by the rating agency as likely enough to meet payment obligations that banks are allowed to invest in them.
Ratings play a critical role in determining how much companies and other entities that issue debt, including sovereign governments, have to pay to access credit markets, i.e., the amount of interest they pay on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for issuers' borrowing costs.
Here's what it means in terms of daily life in Panama. First of all, you retired old people who qualify for the "$100 for the 70 year old" program: You will constantly be paid late. Or not at all, who knows. And for those whose kids depend on the public education system it means that the schools won't be ready to open when the year starts - a long standing Panamanian tradition. You see, for this "investment grade" business it is necessary that the state finances are in order. Poverty rates and education levels or health problems don't count. Sorry.