Tesla inches towards investment grade. What is an investment grade?

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Tesla inches towards being investment grade ... allowing more investors, institutions and sovereign funds to consider investing due to the lower risks associated with the investment grade. 

Recent News:
(Yahoo Finance 25 Jan 2022) Tesla, Inc. -- Moody's upgrades Tesla's corporate family rating to Ba1; outlook positive on 

(Bloomberg 26 Jan 2022) Tesla Inches Toward Blue-Chip Status via Moody’s Boost.  The automaker now sits just one step below investment-grade. Debt could be lifted out of high yield within 18 months: BI

(www.teslarati.com 22 Apr 2022) Tesla moves closer to ‘Investment Grade’ rating with S&P Global following Q1 showing.  Its performance in Q1 has the S&P nearly ready to promote the company’s stock to an “Investment Grade” rating. In October, the organization upgraded Tesla to a BB+ rating, but as the industry continues to expand, the company holds a competitive advantage. Tesla will have to improve one level, from BB+ to BBB, to be considered “Investment Grade,” by the S&P Global’s standards.  (Screenshot of the ratings can be found below.)

Screenshot: Tesla moving closer to investment-grade thanks to its solid FCF

(The following are compiled from materials extracted from Investopedia.com and fidelity.com)

An investment-grade rating signals that a corporate or municipal bond has a relatively low risk of default.

Rating Description

Different bond rating agencies have different rating symbols, to signify investment-grade bonds.
Standard and Poor's awards a "AAA" rating to companies it deems least likely to default.
Moody's awards an "Aaa" rating to companies it considers to be the least likely to default.
Credit ratings are extremely important because they convey the risk associated with buying a certain bond. An investment-grade credit rating indicates a low risk of a credit default, making it an attractive investment vehicle—especially to conservative investors.

What is Investment Grade?
Investment grade refers to the quality of a company's credit. To be considered an investment-grade issue, the company must be rated at 'BBB' or higher by Standard and Poor's or Moody's. Anything below this 'BBB' rating is considered non-investment grade.

Understanding Investment Grade
Credit ratings are extremely important because they convey the risk associated with buying a certain bond. An investment-grade credit rating indicates a low risk of a credit default, making it an attractive investment vehicle—especially to conservative investors.

The importance of an Investment Grade rating
In general, if a bond issuer falls below Investment Grade, the price of their bonds should fall. In some cases, the company will have to pay a higher rate of interest (coupon) to its bondholders. Investment Grade ratings can also affect who a company can sell their bonds.

Conclusion
Thus, it can be worthwhile for us to include investment grade as one of the factors so that we can invest with managed risks.
As for Tesla, investing in this company no longer seems to be speculative as per the Q1/2022 earnings report thanks to a strong FCF.

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