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What is the credit rating of G-secs and T-Bills?*SecuredUnsecuredSovereignDepends on credit rating done by agencies

Question

What is the credit rating of G-secs and T-Bills?

  • Secured
  • Unsecured
  • Sovereign
  • Depends on credit rating done by agencies
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Solution

To determine the credit rating of Government Securities (G-secs) and Treasury Bills (T-Bills), we can consider the following aspects:

  1. Nature of Instruments: G-secs and T-Bills are essentially forms of government debt. G-secs generally have a longer maturity period, while T-Bills are short-term instruments maturing in a year or less.

  2. Security and Default Risk: Since these securities are issued by the government, they are considered low-risk investments. The probability of the government defaulting on these obligations is extremely low, thus they are rated highly.

  3. Credit Rating Agencies: Ratings by agencies like Moody's, S&P, or Fitch classify these securities with a high credit ranking, typically in the 'AAA' category, indicating strong capacity to meet financial commitments.

  4. Answer Evaluation: Based on the established characteristics and the fact that they are backed by the government, both G-secs and T-Bills can be regarded as sovereign securities.

Final Answer: The credit rating of G-secs and T-Bills is considered Sovereign, as they are backed by the government's financial strength and have minimal risk of default.

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