What is Short-Term Local-Currency Rating (ST-LC Rating)?

About The Short-Term Local-Currency Rating (ST-LC Rating):

Short-term local-currency rating is the credit ratings assigned by rating agencies (like Moody’s rating) for determining the capacity of a government or entity to meet obligations from debt instruments issued in local currency with a tenor of less than a  1 year.

Short-term: It  Refers to obligations with a tenor of less than a year (i.e., Treasury bills, commercial papers). Assesses liquidity and the capacity to repay obligations in the short run.

Local-currency:
Means the liability is issued in the currency of the country (for India → Indian Rupee).
Measures the government’s ability to meet obligations, without foreign exchange risk (because it is payable in its own currency).
Purpose of the rating:
Provides investors with a means to evaluate safety in lending, in local currency debt.
As the rating improves, the cost of debt is lower for the government or entity.
Moody’s Rating Scale for Short-Term Rating:
P-1 (PRIME-1): Obligor has superior ability to repay (strongest)
P-2 (PRIME-2): Obligor has strong ability to repay.
P-3 (PRIME-3): Obligor has acceptable ability to repay (investment-grade, but weaker than P-2).
NP (Not PRIME): Obligor is a poor credit (speculative).
India’s Position:
India is rated P-3.
Means:
India can meet short-term obligations denominated in rupees, at an acceptable level.