Skip to Main Content
The Handbook of Global Corporate Treasury
book

The Handbook of Global Corporate Treasury

by Rajiv Rajendra
April 2013
Beginner content levelBeginner
672 pages
13h 22m
English
Wiley
Content preview from The Handbook of Global Corporate Treasury

Chapter Sixteen

Credit Ratings and Bank Credit Assessment

A CORPORATE CREDIT RATING IS a score given to reflect qualitative and quantitative aspects that assess both business and financial risks of corporate issuers of fixed income debt and their individual debt issues. Many large banks have their own methods of assessing corporate debt from a point of view of lending to these corporates. In this chapter, we summarise both approaches and explore some of the factors that a Treasurer can incorporate during review discussions with these entities.

CREDIT RATINGS

A credit rating is generally a score that indicates an independent agency’s opinion on the degree of credit risk of an issuer of debt, indicating the agency’s assessment of the intention and ability of the issuer to fulfil its debt obligations over a period of time.

Ratings are typically established for short term (generally around a year or lower tenor) or long term, with various types of ratings as given in Figure 16.1.

FIGURE 16.1 Different Corporate Ratings

image

These can be:

  • Issuer ratings. The individual obligor is rated as an organisation.
  • Issue ratings. The corporate finance obligation or specific issue is rated for creditworthiness.
  • Structured finance obligation ratings. Specific issuances related to a securitised pool of assets or other derivative financing transactions are rated. This process typically is more complicated ...
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Start your free trial

You might also like

Handbook of the Economics of Finance

Handbook of the Economics of Finance

George M. Constantinides, Milton Harris, Rene M. Stulz
Corporate Foreign Exchange Risk Management

Corporate Foreign Exchange Risk Management

Lars Oxelheim, Alf Alviniussen, Hakan Jankensgard
International Money and Finance, 9th Edition

International Money and Finance, 9th Edition

Michael Melvin, Stefan C. Norrbin

Publisher Resources

ISBN: 9781118127346Purchase book