Explanation

According to the credit rating table:

Moody's Investment Grade Ratings:

• Aaa (Highest grade)
• Aa (High grade)
• A (Upper medium grade)
• Baa (Medium grade) - This is the lowest investment grade category

Moody's Speculative Grade Ratings:

• Ba (Lower medium grade)
• B (Speculative)
• Caa (Poor standing)
• Ca (Highly speculative)
• C (Lowest quality, no interest)
• D (In default)

With Moody's modifiers (A1, A2, A3), within the Baa category:

• Baa1 is the highest tier
• Baa2 is the middle tier
• Baa3 is the lowest tier

Therefore, Baa3 represents the lowest tier of investment grade credit rating by Moody's. Ba1 is already in the speculative grade category.