Which rating signifies an investment-grade status for short-term debt according to credit agencies?

Disable ads (and more) with a premium pass for a one time $4.99 payment

Prepare for the Certified Treasury Professional Exam. Dive into flashcards and multiple choice questions, with hints and explanations for each. Ensure your success on the exam!

An investment-grade status for short-term debt is typically signified by ratings that indicate the issuer's creditworthiness is relatively high, which would allow investors to feel more secure in their investment. The rating "A-1" is designated by Standard & Poor's for a short-term debt instrument, indicating strong capacity to meet financial commitments. This is a crucial aspect of investment-grade status, as it assures investors of the reliability and lower risk associated with such securities.

In the context of other ratings, "Baa" signifies a medium-grade investment status but is generally used for long-term debt rather than short-term. "P2" is a rating from Moody's, which also indicates a good capacity to repay short-term obligations, but it's not as universally recognized as Standard & Poor's A-1 when specifically discussing investment-grade status. "CC," on the other hand, signals a higher risk of default, indicating that the debt is not considered investment-grade at all. Hence, "A-1" stands out as the rating that signifies investment-grade status for short-term debt, reflecting its acceptance within the market for credible and stable investments.

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy