Apex First Equity Fund Prospectus
No dealer, salesperson or any other person has been authorized to give any information or to make any representations, other than those contained in this Prospectus, in connection with the offer contained in this Prospectus and, if given or made, such other information or representations must not be relied upon as having been authorized by Apex First Equity Fund Financial, LLC (“Apex First Equity Fund”). This Prospectus does not constitute an offer by Apex First Equity Fund to sell or a solicitation of an offer to buy any of the securities offered hereby in any jurisdiction to any person to whom it is unlawful for Apex First Equity Fund to make such an offer in such jurisdiction.
Investment Objectives
Apex First Equity Fund’s primary investment objective is to seek to provide current income with preservation of capital for its clients. Capital appreciation is an objective that is sought only when consistent with Apex First Equity Fund’s primary investment objective. Unless otherwise noted, Apex First Equity Fund’s investment objectives are those of its clients and Apex First Equity Fund performs investment services on behalf of its clients.
Principal Investment Strategies
Apex First Equity Fund’s clients seek to achieve their investment objectives by investing primarily in corporate debt securities. Apex First Equity Fund buys and sells securities with a view towards seeking current income with preservation of capital and when consistent with Apex First Equity Fund’s investment objectives, capital appreciation. In selecting securities for investment, Apex First Equity Fund seeks to identify securities which entail reasonable credit risk considered in relation to Apex First Equity Fund’s investment policies. Apex First Equity Fund emphasizes issuers it believes will remain financially sound and perform well in a range of market conditions. Investments are made based on a number of factors such as the financial strength, operating history, earnings potential and management of the issuer. Securities are typically sold when any of these assessments of Apex First Equity Fund materially changes.
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Types of securities. Under normal market conditions, Apex First Equity Fund acquires corporate debt securities with original maturities of more than one year. In addition, Apex First Equity Fund may acquire debt of foreign governments or corporations. These securities may be denominated in U.S. dollars or in currencies other than U.S. dollars. Although not a primary focus, Apex First Equity Fund may invest in high-yield corporate debt issuance if Apex First Equity Fund seeks to entail reasonable credit risk considered in relation to Apex First Equity Fund’s investment policies. Although not a primary focus, Apex First Equity Fund may invest in emerging markets debt issuance if Apex First Equity Fund seeks to entail reasonable credit risk considered in relation to Apex First Equity Fund’s investment policies.
Quality levels. Under normal market conditions, between 60% to 100% of Apex First Equity Fund’s acquisitions are invested in ‘‘investment grade’’ securities, which are securities rated Baa or higher by Moody’s Investors Service, Inc. (‘‘Moody’s’’) or BBB or higher by Standard & Poor’s (‘‘S&P’’) at the time they are purchased.
Up to 40% of Apex First Equity Fund’s acquisitions may be invested in securities rated Ba by Moody’s or BB by S&P at the time of purchase. No more than 20% of Apex First Equity Fund’s acquisitions may be invested in securities rated Caa or lower by Moody’s or S&P, or which are unrated (see the appendix for an explanation of quality ratings).
Principal Investment Risks
Apex First Equity Fund’s investment activities are subject to risks, and there are situations where by money invested in corporate debt or other securities results in a loss. There can be no assurance that Apex First Equity Fund will achieve its investment objectives for its clients.
Credit risk. Credit risk refers to an issuer’s ability to make timely payments of interest and principal. To the extent that Apex First Equity Fund acquires securities with medium- or lower-credit qualities, it is subject to a higher level of credit risk than Apex First Equity Fund acquiring only investment grade securities. The credit quality of non-investment grade securities is considered speculative by recognized rating agencies with respect to the issuer’s continuing ability to pay interest and principal. Lower-grade securities may have less liquidity and a higher incidence of default than higher-grade securities. Apex First Equity Fund may incur higher expenses to protect Apex First Equity Fund’s interest in such securities. The credit risks and market prices of lower-grade securities generally are more sensitive to negative issuer developments, such as reduced revenues or increased expenditures, or adverse economic conditions, such as a recession, than are higher-grade securities.
Market risk. Market risk is the possibility that the market values of corporate debt acquired by Apex First Equity Fund will decline. The prices of debt securities tend to fall as interest rates rise, and such declines tend to be greater among debt securities with longer maturities. Apex First Equity Fund has no policy limiting the maturities of its investments. To the extent that Apex First Equity Fund acquires securities with longer maturities, Apex First Equity Fund is subject to greater market risk than a fund investing solely in shorter-term securities. Lower-grade securities may be more volatile and may decline more in price in response to negative issuer developments or general economic news than higher-grade securities.
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Income risk. The income our clients receive from Apex First Equity Fund is based on interest rates and capital gains, which can vary widely over the short- and long-term.
Call risk. If interest rates fall, it is possible that issuers of debt securities with high interest rates will prepay or ‘‘call’’ their securities before their maturity dates.
Foreign risks. Because the Apex First Equity Fund may acquire debt of foreign issuers, it may be subject to risks not usually associated with acquiring debt of U.S. issuers. These risks can include fluctuations in foreign currencies, foreign currency exchange controls, political and economic instability, differences in financial reporting, differences in securities regulation, and trading and foreign taxation issues. The Apex First Equity Fund may also acquire debt of developing or emerging market countries, which are subject to greater risks than investments in debt of issuers in developed countries.
Investor Profile
In light of Apex First Equity Fund’s investment objectives and principal investment strategies, our clients:
- Seek current income
- Are willing to take on the increased risks of buying debt issuances with the prospect of its value increasing over a period of time.
- Wish to add corporate debt to their investment portfolio
An investment with Apex First Equity Fund is not a deposit of any bank or other insured depository institution. An investment with Apex First Equity Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
An investment in Apex First Equity Fund may not be appropriate for all investors. Apex First Equity Fund’s corporate debt acquisitions are not intended to be a complete investment program, and clients should consider their long-term investment goals and financial needs when making an investment decision about Apex First Equity Fund.
Investment Objectives, Principal Investment Strategies and Risks
Investment Objectives
Apex First Equity Fund’s primary investment objective is to seek to provide current income consistent with its investment strategy. Capital appreciation is also an objective which is sought after when opportunities in the market place allow. Apex First Equity Fund’s investment objectives are fundamental policies and may not be changed without the client’s approval. There are risks inherent in all investments in debt securities; accordingly, there can be no assurance that Apex First Equity Fund will achieve its investment objectives.
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Principal Investment Strategies and Risks
Apex First Equity Fund seeks to achieve its client’s investment objectives by acquiring corporate debt securities. Apex First Equity Fund buys and sells securities with a view towards seeking current income with a preservation of capital and capital appreciation. Apex First Equity Fund seeks to identify companies it believes will remain financially sound and perform well in a range of market conditions. Apex First Equity Fund may seek higher-yielding securities of companies whose financial condition has improved since the issuance of such securities, or is anticipated to improve in the future. Prior to investing, Apex First Equity Fund evaluates each security for credit quality and value based on a number of factors including, among others, the financial strength, operating history, earnings potential and capital appreciation, and management of the issuer. Apex First Equity Fund will sell the securities when one of these assessments of Apex First Equity Fund materially changes or the market presents an opportunity for capital appreciation.
Under normal market conditions, Apex First Equity Fund acquires at least 80% in corporate bonds. For these purposes a corporate bond is defined as any corporate debt security with an original term to maturity of greater than one year. In addition, up to 20% of Apex First Equity Fund’s acquisitions may be invested in securities of foreign governments or corporations. These securities may be dominated in U.S. dollars or in currencies other than U.S. dollars.
Apex First Equity Fund invests in three categories of securities:
- Securities rated at the time of purchase Baa or higher by Moody’s or BBB or higher by S&P;
- Securities rated Ba by Moody’s or BB by S&P.
- Securities rated B or below by Moody’s or S&P or unrated securities of comparable quality (excluding unrated U.S. government agency obligations).
The ratings specified above apply to corporate bonds.
At least 60% of Apex First Equity Fund’s total acquisitions are, and up to 100% may be, category I securities. Up to 40% of Apex First Equity Fund’s acquisitions may be in category II securities. No more than 20% of Apex First Equity Fund’s acquisitions may be in category III securities. Securities rated Ba or lower by Moody’s or BB or lower by S&P or unrated securities judged by Apex First Equity Fund to be of comparable quality are commonly referred to as ‘‘junk bonds.’’
Although Apex First Equity Fund may acquire up to 40% in securities rated Ba by Moody’s or BB by S&P, Apex First Equity Fund’s current operating policy is to limit such acquisitions to less than 35% of its total assets.
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Corporate debt securities with longer maturities generally tend to produce higher yields but are subject to greater market risk than debt securities with shorter maturities. Apex First Equity Fund is not limited as to the maturities of the corporate debt securities in which it invests, except that Apex First Equity Fund acquires corporate bonds (which are defined as any debt security with an original term to maturity of greater than one year). The value of debt securities generally varies inversely with changes in prevailing interest rates. If interest rates rise, debt security prices generally fall; if interest rates fall, debt security prices generally rise. Shorter-term securities are generally less sensitive to interest rate changes than longer-term securities; thus, for a given change in interest rates, the market prices of shorter-maturity debt securities generally fluctuate less than the market prices of longer-maturity debt securities. Debt securities with shorter maturities generally offer lower yields than debt securities with longer maturities assuming all other factors, including credit quality, are equal. Credit risk refers to an issuer’s ability to make timely payments of interest and principal. Apex First Equity Fund acquires at least 60% in investment grade debt securities and may acquire up to 40% in non-investment grade debt securities. Ratings assigned by the ratings agencies represent their opinions of the quality of the debt securities they undertake to rate, but not the market risk of such securities. It should be emphasized that ratings are general and are not absolute standards of quality.
Generally, lower-grade securities provide a higher yield than higher-grade securities of similar maturity but are subject to greater risks, such as greater credit risk, greater market risk and volatility, greater liquidity concerns and potentially greater manager risk. Lower-grade securities are commonly referred to as ‘‘junk bonds.’’ Rated lower-grade debt securities are regarded by Moody’s and S&P as predominately speculative with respect to the capacity to pay interest or repay principal in accordance with their terms. Clients should consider carefully the additional risks associated with investment in lower-grade securities.
Lower-grade securities are more susceptible to nonpayment of interest and principal and default than higher-grade securities. Adverse changes in the economy or the individual issuer often have a more significant impact on the ability of lower-grade issuers to make payments, meet projected goals or obtain additional financing. When an issuer of such securities is in financial difficulties, Apex First Equity Fund may incur additional expenditures or invest additional assets in an effort to obtain partial or full recovery on amounts due.
While all debt securities fluctuate inversely with changes in interest rates, the prices of lower-grade securities generally are less sensitive to changes in interest rates and are more sensitive to specific issuer developments or real or perceived general adverse economic changes than higher-grade securities. A projection of an economic downturn, for example, could cause a decline in prices of lower-grade securities because the advent of a recession could lessen the ability of a highly-leveraged company to make principal and interest payments on its senior securities or obtain additional financing when necessary. A significant increase in market interest rates or a general economic downturn could severely disrupt the market for such securities and the market values of such securities. Such securities also often experience more volatility in prices than higher-grade securities.
The secondary trading market for lower-grade securities may be less liquid than the market for higher-grade securities. Prices of lower-grade debt securities may decline rapidly in the event a significant number of holders decide to sell. Changes in expectations regarding an individual issuer, an industry or lower-grade debt securities generally could reduce market liquidity for such securities and make their sale by Apex First Equity Fund more difficult, at least in the absence of price concessions. The market for lower-grade securities also may have less available information available, further complicating evaluations and valuations of such securities and placing more emphasis on the investment adviser’s experience, judgment and analysis than other securities.
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Distributions from Apex First Equity Fund
In addition to any increase in the value which Apex First Equity Fund may achieve, shareholders may receive distributions of capital gains.
Capital gain dividends. Apex First Equity Fund may realize capital gains or losses when it sells securities, depending on whether the sales prices for the securities are higher or lower than purchase prices. Apex First Equity Fund distributes any net capital gains to shareholders as capital gain dividends.
Federal Income Taxation
Distributions of Apex First Equity Fund’s taxable income (generally ordinary income and net short-term capital gain) are taxable to clients as ordinary income to the extent of Apex First Equity Fund’s earnings and profits. Distributions of Apex First Equity Fund’s net capital gain (which is the excess of net long-term capital gain over net short-term capital loss) designated as capital gain dividends, if any, are taxable to clients as long-term capital gain and regardless of how long the shares have been held by such shareholders.
Current law provides for reduced U.S. federal income tax rates on (i) long-term capital gains received by individuals and (ii) ‘‘qualified dividend income’’ received by individuals from certain domestic and foreign corporations. The reduced rates for capital gains generally apply to long-term capital gains from sales or exchanges recognized on or after May 6, 2003, and cease to apply for taxable years beginning after December 31, 2010. The reduced rate for dividends generally applies to ‘‘qualified dividend income’’ received in taxable years beginning after December 31, 2002, and ceases to apply for taxable years beginning after December 31, 2010. Clients must also satisfy certain holding period and other requirements in order for the reduced rate for dividends to apply.
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Appendix — Description of Securities Ratings
Standard & Poor’s — A brief description of the applicable Standard & Poor’s (S&P) rating symbols and their meanings (as published by S&P) follows:
An S&P issue credit rating is a current opinion of the creditworthiness of an obligor with respect to a specific financial obligation, a specific class of financial obligations, or a specific financial program (including ratings on medium-term note programs and commercial paper programs). It takes into consideration the creditworthiness of guarantors, insurers, or other forms of credit enhancement on the obligation and takes into account the currency in which the obligation is denominated.
The issue credit rating is not a recommendation to purchase, sell, or hold a financial obligation, inasmuch as it does not comment as to market price or suitability for a particular investor.
Issue credit ratings are based on current information furnished by the obligors or obtained by S&P from other sources it considers reliable. S&P does not perform an audit in connection with any credit rating and may, on occasion, rely on un-audited financial information. Credit ratings may be changed, suspended, or withdrawn as a result of changes in, or unavailability of, such information, or based on other circumstances.
Issue credit ratings can be either long-term or short-term. Short-term ratings are generally assigned to those obligations considered short-term in the relevant market. In the U.S., for example, that means obligations with an original maturity of no more than 365 days — including commercial paper. Short-term ratings are also used to indicate the creditworthiness of an obligor with respect to put features on long-term obligations. The result is a dual rating, in which the short-term ratings address the put feature, in addition to the usual long-term rating. Medium-term notes are assigned long-term ratings.
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Long-Term Issue Credit Ratings
Issue credit ratings are based, in varying degrees, on the following considerations:
- Likelihood of payment — capacity and willingness of the obligor to meet its financial commitment on an obligation in accordance with the terms of the obligation;
- Nature of and provisions of the obligation;
- Protection afforded by, and relative position of, the obligation in the event of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditors’ rights.
The issue rating definitions are expressed in terms of default risk. As such, they pertain to senior obligations of an entity. Junior obligations are typically rated lower than senior obligations, to reflect the lower priority in bankruptcy, as noted above. (Such differentiation applies when an entity has both senior and subordinated obligations, secured and unsecured obligations, or operating company and holding company obligations.) Accordingly, in the case of junior debt, the rating may not conform exactly with the category definition.
AAA: An obligation rated ‘‘AAA’’ has the highest rating assigned by S&P. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong.
AA: An obligation rated ‘‘AA’’ differs from the highest-rated obligations only to a small degree. The obligor’s capacity to meet its financial commitment on the obligation is very strong.
A: An obligation rated ‘‘A’’ is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor’s capacity to meet its financial commitment on the obligation is still strong.
BBB: An obligation rated ‘‘BBB’’ exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.
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Speculative Grade
BB, B, CCC, CC, C: Obligations rated ‘‘BB,’’ ‘‘B,’’ ‘‘CCC,’’ ‘‘CC’’ and ‘‘C’’ are regarded as having significant speculative characteristics. ‘‘BB’’ indicates the least degree of speculation and ‘‘C’’ the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions.
BB: An obligation rated ‘‘BB’’ is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to the obligor’s inadequate capacity to meet its financial commitment on the obligation.
B: An obligation rated ‘‘B’’ is more vulnerable to nonpayment than obligations rated ‘‘BB,’’ but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor’s capacity or willingness to meet its financial commitment on the obligation.
CCC: An obligation rated ‘‘CCC’’ is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation.
CC: An obligation rated ‘‘CC’’ is currently highly vulnerable to nonpayment.
C: A subordinated debt or preferred stock obligation rated ‘C’ is currently highly vulnerable to nonpayment. The ‘C’ rating may be used to cover a situation where a bankruptcy petition has been filed or similar action taken, but payments on this obligation are being continued. A ‘C’ also will be assigned to a preferred stock issue in arrears on dividends or sinking fund payments, but that is currently paying.
D: An obligation rated ‘‘D’’ is in payment default. The ‘‘D’’ rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. The ‘‘D’’ rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized.
Plus (+) or minus (-): The ratings from ‘AA’ to ‘CCC’ may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.
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NR: This indicates that no rating has been requested, that there is insufficient information on which to base a rating, or that S&P does not rate a particular obligation as a matter of policy.
Short-Term Issue Credit Ratings
A S&P short-term rating is a current assessment of the likelihood of timely payment of debt considered short-term in the relevant market
Ratings are graded into several categories, ranging from ‘‘A-1’’ for the highest-quality obligations to ‘‘D’’ for the lowest. These categories are as follows:
A-1: A short-term obligation rated ‘A-1’ is rated in the highest category by S&P. The obligor’s capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor’s capacity to meet its financial commitment on these obligations is extremely strong.
A-2: A short-term obligation rated ‘A-2’ is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor’s capacity to meet its financial commitment on the obligation is satisfactory.
A-3: A short-term obligation rated ‘A-3’ exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.
B: A short-term obligation rated ‘B’ is regarded as having significant speculative characteristics. Ratings of ‘B-1’, ‘B-2’ and ‘B-3’ may be assigned to indicate finer distinctions within the ‘B’ category. The obligor currently has the capacity to meet its financial commitment on the obligation; however, it faces major ongoing uncertainties which could lead to the obligor’s inadequate capacity to meet its financial commitment on the obligation.
B-1: A short-term obligation rated ‘B-1’ is regarded as having significant speculative characteristics, but the obligor has a relatively stronger capacity to meet its financial commitments over the short-term compared to other speculative-grade obligors.
B-2: A short-term obligation rated ‘B-2’ is regarded as having significant speculative characteristics, and the obligor has an average speculative-grade capacity to meet its financial commitments over the short-term compared to other speculative-grade obligors.
B-3: A short-term obligation rated ‘B-3’ is regarded as having significant speculative characteristics, and the obligor has a relatively weaker capacity to meet its financial commitments over the short-term compared to other speculative-grade obligors.
C: A short-term obligation rated ‘C’ is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation.
D: A short-term obligation rated ‘D’ is in payment default. The ‘D’ rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. The ‘D’ rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized.
A short-term rating is not a recommendation to purchase, sell, or hold a financial obligation, inasmuch as it does not comment as to market price or suitability for a particular investor. Issue credit ratings are based on current information furnished by the obligors or obtained by S&P from other sources it considers reliable. S&P does not perform an audit in connection with any credit rating and may, on occasion, rely on unaudited financial information. Credit ratings may be changed, suspended, or withdrawn as a result of changes in, or unavailability of, such information, or based on other circumstances.
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Dual Ratings
S&P assigns ‘‘dual’’ ratings to all debt issues that have a put option or demand feature as part of their structure. The first rating addresses the likelihood of repayment of principal and interest as due, and the second rating addresses only the demand feature. The long-term debt rating symbols are used for bonds to denote the long-term maturity and the commercial paper rating symbols for the put option (for example, ‘AAA/A-1+’). With short-term demand debt, S&P note rating symbols are used with the commercial paper rating symbols (for example, ‘SP-1+/A-1+’).
Moody’s Investors Service Inc. — A brief description of the applicable Moody’s Investors Service, Inc. (Moody’s) rating symbols and their meanings (as published by Moody’s) follows:
Long-Term Obligation Ratings
Moody’s long-term obligation ratings are opinions of the relative credit risk of fixed-income obligations with an original maturity of one year or more. They address the possibility that a financial obligation will not be honored as promised. Such ratings reflect both the likelihood of default and any financial loss suffered in the event of default.
Moody’s Long-Term Rating Definitions:
Aaa: Obligations rated Aaa are judged to be of the highest quality, with minimal credit risk.
Aa: Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.
A: Obligations rated A are considered upper-medium grade and are subject to low credit risk.
Baa: Obligations rated Baa are subject to moderate credit risk. They are considered medium-grade and as such may possess certain speculative characteristics.
Ba: Obligations rated Ba are judged to have speculative elements and are subject to substantial credit risk.
B: Obligations rated B are considered speculative and are subject to high credit risk.
Caa: Obligations rated Caa are judged to be of poor standing and are subject to very high credit risk.
Ca: Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.
C: Obligations rated C are the lowest rated class of bonds and are typically in default, with little prospect for recovery of principal or interest.
Note: Moody’s appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category.
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Medium-Term Note Ratings
Moody’s assigns long-term ratings to individual debt securities issued from medium-term note (MTN) programs, in addition to indicating ratings to MTN programs themselves. Notes issued under MTN programs with such indicated ratings are rated at issuance at the rating applicable to all pari passu notes issued under the same program, at the program’s relevant indicated rating, provided such notes do not exhibit any of the characteristics listed below
- Notes containing features that link interest or principal to the credit performance of any third party or parties (i.e., credit-linked notes);
- Notes allowing for negative coupons, or negative principal;
- Notes containing any provision that could obligate the investor to make any additional payments;
- Notes containing provisions that subordinate the claim.
For notes with any of these characteristics, the rating of the individual note may differ from the indicated rating of the program.
For credit-linked securities, Moody’s policy is to ‘‘look through’’ to the credit risk of the underlying obligor. Moody’s policy with respect to non-credit linked obligations is to rate the issuer’s ability to meet the contract as stated, regardless of potential losses to investors as a result of non-credit developments. In other words, as long as the obligation has debt standing in the event of bankruptcy, we will assign the appropriate debt class level rating to the instrument.
Market participants must determine whether any particular note is rated, and if so, at what rating level. Moody’s encourages market participants to contact Moody’s Ratings Desks or visit www.moodys.com directly if they have questions regarding ratings for specific notes issued under a medium-term note program. Unrated notes issued under an MTN program may be assigned an NR (not rated) symbol.
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Short-Term Ratings
Moody’s short-term ratings are opinions of the ability of issuers to honor short-term financial obligations. Ratings may be assigned to issuers, short-term programs or to individual short-term debt instruments. Such obligations generally have an original maturity not exceeding thirteen months, unless explicitly noted.
Moody’s employs the following designations to indicate the relative repayment ability of rated issuers:
P-1
Issuers (or supporting institutions) rated Prime-1 have a superior ability to repay short-term debt obligations.
P-2
Issuers (or supporting institutions) rated Prime-2 have a strong ability to repay short-term debt obligations.
P-3
Issuers (or supporting institutions) rated Prime-3 have an acceptable ability to repay short-term obligations.
NP
Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime rating categories.
Note: Canadian issuers rated P-1 or P-2 have their short-term ratings enhanced by the senior-most long-term rating of the issuer, its guarantor or support-provider.