CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.1% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

What is speculative grade liquidity?

Speculative grade liquidity

It’s a rating of a company’s ability to meet its financial obligations that are due over the following 12 months. Also called SGL, the appraisal is issued by credit rating agency Moody's to indicate a firm's liquidity risk and chances of default.

Where have you heard about speculative grade liquidity?

Not surprisingly, the number of companies given the weakest SGL rating hit an all-time high at the height of the recession in 2009. Plunging oil and gas prices can also lead to periodical rises in low ratings.

What you need to know about speculative grade liquidity.

To determine a rating, Moody’s looks at a business’s debt liabilities and ability to generate cash through internal, external and alternative sources.

Ratings range from SGL-1 for the most liquid companies to SGL-4 for the least liquid. A firm with a top rating of “very good” liquidity means it should be able to fund its obligations over the next year using internal resources alone, whereas a company with “weak” liquidity will most likely have to rely on external funding sources that have a "highly uncertain” outlook, Moody's says.

Find out more about speculative grade liquidity.

Read our definition of Moody’s to find out more about the credit rating agency.

Related Terms

Latest video

Latest Articles

View all articles

Still looking for a broker you can trust?

Join the 610,000+ traders worldwide that chose to trade with

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading