U.S. companies continue to hold record amounts of cash,according to a study by Standard & Poor'sRatings Services, and the high levels show no sign of dropping.Nonfinancial corporations rated by Standard & Poor's held $1.25trillion in cash and short-term investments at the end of 2011, up41% from the level at the end of 2006. Their ratio of cash andshort-term investments to total assets increased to more than 8.6%from 7% between 2006 and 2008.

The increase in liquidity was greater for investment-gradecompanies, though speculative-grade issuers increased their cashreserves as well. Cash and equivalents recorded by investment-gradeissuers showed a compound annual growth rate (CAGR) of 8.7% overthe past five years, while speculative-grade issuers recorded a2.3% CAGR.

Companies that are rated A or higher held 54% of the total cashand short-term investments as of 2011, even though they compriseonly 10% of issuers. Companies rated B and lower held only 10% ofthe cash and short-term investments, though they make up 46% ofissuers.