Understanding 'Baa' Credit Ratings

ABC Corporation has issued a bond that has received a credit rating of 'Baa' from Moody's Investors Service. This rating indicates that the bond is considered medium-grade and carries some risk. As an investor considering this bond, it is critical to understand what the 'Baa' rating implies about the issuer's creditworthiness. In this context, which of the following statements best describes the meaning of a 'Baa' rating?