Corporate Credit Rating

Transcription

1 Corporate Credit Rating By Ms. Watana Tiranuchit Ms. Nopalak Rakthum TRIS Rating Co., Ltd. 3 September

2 Content (1) Importance of Credit Rating Definitions and Symbols Credit Rating Process Credit Rating Methodology Credit Rating Fee TRIS Rating Statistics FAQ 2

3 Importance of Credit Rating 3

4 Why do companies need ratings? To issue debt in capital market (wider fund raising alternatives in terms of size, maturity, covenant packages) Required by the SEC Bond sold to retail investors Bond with complicate structure Required by the investors To negotiate more favorable terms with banks To evaluate its credit risk 4

5 Bank Loan Bond market vs. Bank loan Indirect Lending Depositor deposit Bank Lend Company Bond Market Direct Lending Rating Agency Bonds Investors Company Lend 5

6 Comparison of MLR and Bond Yield *Average 3-year bond yield 6

7 35,000,000 30,000,000 Thai Financial Markets Equity = 44% Lending = 49% Debt market = 7% 25,000,000 Baht Million 20,000,000 15,000,000 10,000,000 5,000,000 - Equity Market Lending from Financial Institutions Debt Market 7

8 Thai Bond Market Baht Billion 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Corporate Bonds = 20% of Total Bonds Jul-15 Corporate ,069 1,109 1,344 1,265 1,499 1,453 1,593 1,827 1,953 Government 2,192 2,700 3,127 3,793 3,919 4,714 5,509 5,751 6,826 6,992 6,967 7,260 Source: Thai BMA *As of July

9 New Corporate Bond Issuance 600, , ,000 Baht Million 300, , ,000 0 Fixed Income Instruments 9

10 New Corporate Bond Issuance by sector 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Jul-15 Bank Leasing Energy Residential Telecom Others 10

11 Definitions and Symbols 11

12 Meanings of the Credit Rating The opinion of the rating agency about relative ability and the willingness of the company to repay its obligations, including principal and interest, in full and on time Rating reflects the relative ranking of Default Risk of the company 12

13 Types of Ratings Corporate rating (Company rating / Issuer rating) Reflects the ability and willingness of the company to repay its total obligations Issue ratings Issue ratings may be different from the company rating due to differences in structure and/or the seniority of each issue Senior Secured bonds Senior Unsecured bonds Subordinated bonds Hybrid bonds Guaranteed bonds Securitized bonds 13

14 Example of Issue Rating Debt Type Senior secured debentures A+ Issuer Rating A Senior unsecured debentures A Subordinated debentures A- Guarantor AAA Guaranteed debentures AAA 14

15 Credit Rating V.S. Level of Risk Rating Category Risk Grade AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- C D Lowest Medium Highest Default Investment Grade Speculative Grade 15

16 Credit Rating Agency There are two types of CRAs 1. International Credit Rating Agency : Provide the rating services to both sovereigns and companies globally 2. Domestic Credit Rating Agency : Provide the rating services to companies within a specific country or region 16

17 List of Major International CRAs Name Standard & Poor s (S&P) Moody s Investors Service (Moody s) Fitch Ratings (Fitch) Rating and Investment Information, Inc. (R&I) Japan Credit Rating Agency, Ltd. (JCR) Headquarter USA USA USA, UK Japan Japan 17

18 Examples of Local CRAs Name TRIS Rating Co., Ltd. Rating Agency Malaysia Berhad CRISIL Limited PEFINDO Credit Rating Indonesia Philippine Rating Services Corporation Headquarter Thailand Malaysia India Indonesia Philippines 18

19 S&P Clients in Thailand vs. TRIS Rating Name Foreign S&P Local TRIS Rating THAILAND BBB+/Stable A-/Stable BAY BBB+/Stable BBB+/Stable AAA/Stable PTTEP BBB+/Stable BBB+/Stable AAA/Stable RATCH BBB+/Stable BBB+/Stable AAA/Stable TMB BBB-/Stable BBB-/Stable A+/Stable As of 28 Aug

20 Rating Symbol TRIS Rating S&P Moody s AAA AAA Aaa AA+ AA+ Aa1 AA AA Aa2 AA- AA- Aa3 A+ A+ A1 A A A2 A- A- A3 BBB+ BBB+ Baa1 BBB BBB Baa2 BBB- BBB- Baa3 BB+ BB+ Ba1 BB BB Ba2 BB- BB- Ba3 B+ B+ B1 B B B2 B- B- B3 C+ CCC+ Caa1 C CCC Caa2 C- CCC- Caa3 CC Ca R D SD and D C 20

21 Credit Rating Process 21

22 Initial Rating Process APPEAL WITHIN 7 DAYS PROVIDE NEW DATA WITHIN 15 DAYS WITH- DRAWN INFORMATION GATHERING INTERVIEW MAJOR DEPT. & SITE VISIT MANAGEMENT/ AUDIT COM. MEETING ANALYSIS RATING COMMITTEE MEETING INFORM RATING TO ISSUER DISAGREE ACCEPT 6 WEEKS 2 WEEKS KEEP CONFIDENTIAL RATING ANNOUNCEMENT MONITOR & ANNUAL REVIEW MONITOR & ANNUAL REVIEW * For more details, please see Rating Information/Rating Process 22

23 Annual Review Process INFORMATION UPDATE MANAGEMENT MEETING ANALYSIS RATING COMMITTEE MEETING INFORM REVIEW RESULT TO ISSUER 2-3 WEEKS 2 WEEKS KEEP CONFIDENTIAL RATING ANNOUNCEMENT MONITOR & ANNUAL REVIEW MONITOR & ANNUAL REVIEW WITH- DRAWN CANCELLATION ANNOUNCEMENT * For more details, please see Rating Information/Rating Process 23

24 List of Preliminary information required PAST / CURRENT / PROJECTION Background information of the company Shareholder structure Organization of management Investment in related companies Business policy / Marketing policy / Pricing policy Operating data and market research List of major customers / supplier / competitors Financial data i.e. breakdown of revenue and cost structure Debt profile / major loan agreements Financial projection, including CAPEX & investment plan Etc. i.e. other contractual agreements, audit committee report 24

25 Rating Monitoring & Report Initial Rating & Annual Review Report: Assign / affirm / change : Rating and/or Outlook New Issue Rating Report: Assign rating for new issue; Affirm : Rating and/or Outlook (can be changed if necessary) Quarterly Monitoring Projection comparison Special Monitoring (event risks) Report: CreditUpdate Affirm / change : Rating and/or Outlook CreditAlert Remove Outlook & replace with Alert : positive / negative / developing 25

26 Credit Rating Methodology 26

27 Key Rating Factors Industry Analysis Business Analysis Financial Analysis 27

28 Rating Process Industry Analysis Business Analysis Financial Analysis Business Risk Financial Risk Rating Assignment by Rating Committee Monitoring Process 28

29 Industry Analysis 1. Nature of the company s industry 2. Industry prospects 3. Level of competition 29

30 Industry Analysis (1) 1. Nature of the company s industry Cyclicality of the industry, vulnerability to change in the economy Evolving or well-established industry 30

31 Industry Analysis (2) 2. Industry prospects Demand growth potential Secular change of product/technology 31

32 Industry Analysis (3) 3. Level of competition Competitive environment: number of players, demand-supply balance Barriers to entry: business nature or regulation License requirement Capital intensive Sophisticated technology Threats of substituted products The degree of product differentiation (branded) 32

33 Business Analysis 1. Strategy & management 2. Ownership & group support 3. Diversification 4. Competitive position 33

34 Business Analysis (1) 1. Strategy & Management Long term strategy, strategic planning, decision making Track record and competency of management team Management team structure, continuity and succession Control, auditing, risk management and information system 34

35 Business Analysis (2) 2. Ownership & Group support On-going supports either financially or operationally Business synergy and group performance Strengths derived from parent and/or subsidiary support 35

36 Business Analysis (3) 3. Diversification Diversity of business - product lines, customer base, market segments, geographic Ability to manage diverse operations 36

37 Business Analysis (4) 4. Competitive Position Market position Market share, size, scale Brand reputation/awareness Assets quality Product quality Marketing networks / logistics / distribution channels Customer base Technological advantage, innovation, R&D 37

38 Business Analysis (5) 4. Competitive Position (cont.) Operational Efficiency/Cost competitiveness Economies of scale:- capacity and utilization Operating skills:- production yield, waste reduction Procurement of raw materials and inventory management The efficiency of worker Quality control Cost structure 38

39 Financial Analysis Qualitative Analysis Accounting quality Financial policy Quantitative analysis Capital structure Profitability Efficiency Cash flow protection and liquidity 39

40 Financial Analysis (1) Qualitative Analysis Accounting quality Disclosure of information Auditor s report/opinion Changes in accounting policies Financial policy Funding policy Target capital structure Dividend policy Reserves for bad debts or policies for writing off obsolete Inventory Hedging policy 40

41 Financial Analysis (2) Quantitative analysis 1. Capital structure Leverage level, D/E ratio ST loans vs. LT loans Major adjustments for off-balance sheet obligations Operating leases Financial guarantees/ supports provided to related parties Litigations Potential penalties 41

42 Financial Analysis (3) 2. Profitability Gross profit margin Operating profit margin Net Profit Margin ROA, ROE, ROPC (return on permanent capital) 42

43 3. Efficiency Financial Analysis (4) Inventory turnover / Inventory days A/R days A/P days Operating cash cycle = AR days +Inventory Days AP days Very important for trading firms/ retailers to determine level of cash flow needed for normal operation 43

44 Financial Analysis (5) 4. Cash flow protection and liquidity 4.1 Cash Flow Protection FFO/total debts Interest coverage ratio DSCR = debt service coverage ratio Refinancing risk 4.2 Liquidity/financial flexibility Cash on hand Unused credit lines: committed vs. uncommitted Accessibility to capital and money markets Other liquid assets Support from shareholders 44

45 Industry Business Company Rating Financial 45

46 Outlook แนวโน มอ นด บเครด ต Rating outlook will always be assigned to all long-term ratings Rating outlook potential for change over medium term (1-2 years) stable (คงท ) = not likely to change positive (บวก) = likely to be raised negative (ลบ) = likely to be lower developing (ย งไม ช ดเจน) = may be raised, lowered or unchanged 46

47 Credit Rating Fee 47

48 Annual Fee Company rating Issue rating Credit Rating Fees Site Visit expenses Legal Fee (if any) 48

49 TRIS Rating Statistics 49

50 TRIS Rating s Rated Issuers 370 issuers since 1993, with total issue size of approximately Bt2.9 trillion 159 outstanding rated issuers as of 19 August 2015 (published 132/ private & in the rating process 27) Rated issuers include both Thai and multinational corporations Ratings assigned to diverse sectors Sector No. of Rated Issuers Financial Institutions 41 Property Developers 27 Energy 18 Agro & Food 15 Engineering & Construction 9 Transportation 7 Telecom 8 Commerce 5 Healthcare Services 3 Others 26 TOTAL 159 * As of 19 Aug

51 Rating Distribution Category A = 39.31% BBB = 35.86% AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB to D As of 7 Aug

52 Engineering & Construction 80 % No. of clients AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ to D % As of Aug

53 Energy 80 % No. of clients BB+ to AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- D % As of Aug

54 Agri & Food Industry 80 % No. of clients AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ to D % As of Aug

55 Residential Developers 80 % No. of clients AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ to D As of Aug

56 Frequently Asked Questions about Credit Ratings 56

57 Frequently Asked Questions Which industry has the high/low credit risk? How does the industry cycle affect the rating of a company? When will the rating change? Time horizon of rating. What is the default rate of each individual rating category? Can AAA default? 57

58 Which Industry has the High/Low Credit Risk? 58

59 Industry risk influences but not the only risk that determine a company credit rating Industry risks + Business risks + Financial risks Credit risks Ratings 59

60 1. Highly cyclical High Risk Industries residential property, shipping, steel 2. Intensive competition: many players, commodity products petrochemical, construction materials, airline, contractor, semiconductor 3. Expose to (uncontrollable) external factors agricultural products, airlines, hotel 60

61 High Risk Industries 4. Rapid change of technology internet, semiconductor 61

62 Low Risk Industries 1. Steady demand growth Utility i.e. electricity, water 2. Ability to maintain margins Branded consumer products 3. Monopoly Air traffic control 62

63 How the Industry Cycle Affects the Rating of a Company? When Will a Rating Change? 63

64 A credit rating for a company at any time incorporates industry cycle and expectation about risks of the company over the medium term. 64

65 Industry cycles demand fluctuation, and swings of supply capacity Exception, when the cycle and/or the company s performance is substantially different from initial expectation 65

66 Rating Through the Cycle Highest Rating Lowest Past Present Future (3-5 years) 66 66

67 Change of Rating A A- A- BBB+ Past Present Future 67

68 Rating of a company will be changed when a company risks differ from previous expectation significantly and permanently. Rating of a lower rated companies will be more likely to change than a higher rated. 68

69 What is the Default Rate of Each Individual Rating Category? Can AAA Default? 69

70 Cumulative Defaulters By Time Horizon Among Global Corporates, From Original* Rating ( ) AAA AA A BBB BB B CCC/C Total Number of issuers defaulting within one year Three years Five years ,360 Seven years , ,690 Total , ,301 Source: S&P s : Default, Transition, and Recovery: 2014 Annual Global Corporate Default Study And Rating Transitions 30-Apr

71 71

72 Q & A THANK YOU 72

73 Contact Person: Business Development Department: Ms. Kornkamol Thavisin TRIS Rating Co., Ltd. 24 th Floor, Silom Complex Building Tel: #218 Fax:

74 Most Frequently Asked Questions About Credit Rating by Nopalak Rakthum 1

75 Emerging of New Financial Instruments Over the past 20 years, new financial instruments and rating concepts emerged and developed National scale Parent guaranteed; Partial guaranteed Asset-backed securities Government related entities Hybrid capital instruments Sovereign rating and T&C Group rating 2

76 Most Frequently Asked Questions About Credit Rating 1. What are the differences of the ratings assigned by TRIS Rating vs other CRAs? 2. When the rating could not be assigned? 3. How to rate the related companies (group rating)? 4. How can the rating of issuer be enhanced or notched down or capped? 5. How can the rating of specific issue be enhanced or notched down or capped? 3

77 Most Frequently Asked Questions About Credit Rating (continued) 6. What are rating factors of hybrid capital instruments? 7. How much equity content will be given to a specific characters of hybrid capital instruments? 8. What is the maximum equity content allowed for an issuer? 9. What are rating factors of sovereign rating? 10.Can the sovereign rating assigned by TRIS Rating compare with other ratings assigned by TRIS Rating, i.e. corporate ratings? 11.What are factors that TRIS Rating used to assign ratings of companies operated overseas? 4

78 Concept of credit ratings Rating is raking, based on level of credit worthiness The measurement of ability and willingness to comply with financial obligations of ultimate obligor Specific repayment schedule and measurable amount Technically, dividend payment is not financial obligation imputed promised 5

79 What are the differences of the ratings assigned by TRIS Rating vs other CRAs? 6

80 Three Concepts of Credit Rating Scale Rating is comparison International (global) comparison international scale Regional comparison regional scale National (domestic) comparison national scale 7

81 International Scale Ratings Global comparison Local currency and foreign currency Benefits to international investors for global investment decision making. No limits on regional or national boundary. Highest rating in a country may not be AAA. 8

82 National and Regional Scale Ratings Comparable within a country (or region) only Could not compare with international ratings Generally assign only local currency rating Highest rating of domestic issuers could be AAA, mostly assign to the government. 9

83 National Scale Rating Is Not A Mapping TRIS does not map rating of international scale into national scale. For parent-guaranteed debentures, TRIS Rating will analyze credit risks using our best effort based on available information. The rating of parent company should be rated by TRIS Rating otherwise the rating of parent company rated by NRSROs should not lower than BBB. TRIS Rating will not use only rating assign by international CRAs to map into national scale. Though the availability of ratings will provide essential information. Even though Thai government rated by S&P = A-, TRIS Rating will not reach the national scale rating by the mark up of 6 from international scale. TRIS Rating will evaluate the ratings assigned by other CRAs and assess more detail of the business risks and financial performance. Our experience shows that the lower the international scale rating the narrower the rating gap between national vs international scale 10

84 However, the ratings within TRIS Rating Scale should be comparable, no matter they are industrial companies, financial institutions, government-related entities, or sovereigns. 11

85 When the rating could not be assigned? 12

86 Rating assigned to credit-based financial obligations Interest bearing debts Credit based financial obligations Specific amount and repayment schedule 13

87 CRA will not assign ratings to.. Equity stock Debt instrument which repayment tied with stock index, or commodity prices, etc. When information about the issuer is insufficient: very short track record; under restructuring process; no audited financial report, etc. 14

88 How can the rating of issuer and issue be enhanced or notched down or capped? 15

89 Rating Enhancement Issuer rating will be enhanced if default risk of the issuer is lower by: Extraordinary support from government (GRE) Extraordinary support from parent company or group Issue rating will be enhanced if default risk and loss severity of specific debenture are lower by: Parent guaranteed, subsidiary guaranteed Secured by assets or flows of income or reserve account 16

90 Rating Enhancement TRIS Rating generally applies bottomed up approach for issuer rating in a group. Rating will be enhanced (notched up) from standalone rating. 17

91 Rating Factors for Government- Related Entities (GRE) Standalone rating similar factors to other FI or Non- FI corporate Degree of government supports extraordinary supports Extraordinary supports: Linkages between government and the GRE (the level of government intervention and proportion of government shares, the existing of guaranteed debts, reputation risks, share names etc.) Strategic important of the GRE ability to use other private company to achieve similar mission, roles of the GRE to deliver government policies and actions 18

92 Rating Factors for Government- Related Entities (GRE)(continued) Issuer rating = Standalone rating+ extraordinary support from government Issuer rating of GRE ranges between standalone rating and AAA Ratings of GRE could be very high even its financial performance is miserable if TRIS Rating believes that: Government views this GRE s function is very important to government The GRE was considered as state-owned enterprise and its charter indicates that government will responsible to repay debts 19

93 Rating Notched Down or Capped In general, issuer rating of a subsidiary in a group is not higher than (capped by) the group rating. Rating of a specific issue could be notched down if : It is a junior debt (when portion of senior debts >20% of total assets) Issued by structural subordinated entity (eg. pure holding company in a group) 20

94 How to rate related companies (Group Rating)? 21

95 Group Rating Process Source: TRIS Rating Group Rating Methodology 22

96 Group Rating Implicitly assign group rating Group of companies comprised those are under controlled of a single group of shareholders or management teams A company may be considered as part of a group if TRIS Rating believes that the company s business direction and policies are determined by the group. Generally a subsidiary is consolidated in a group financial performance and the rating will be capped by the group rating 23

97 Issuer Rating of Company in A Group Issuer rating of core company will be equal to the group (consolidated) rating. Issuer rating of subsidiary could be enhanced or capped by the group rating, unless we are convinced that any financial difficulty borne by the group will have a limited impact on the issuer s credit quality special purpose vehicle company, a project finance company, other forms of business that insulate the issuer from its parent company and other group members Or when the proportion of minority shareholders is large enough to counter decisions of the major shareholders 24

98 When Affiliates Are Included in The Group A company may be considered as part of a group even when parent company holds less than 50% of its shares. Two or more companies may have relationship that enables one company to control, support, or interfere the other firm: common shareholders for both firms, similar brand names, majority proportion of board seats, and the role of the designated directors, overlapping or complementing lines of businesses, and historical record of interventions or support 25

99 Issuer Rating of Subsidiary in The Group Could be either: 1. Capped by the group rating, or 2. Equal to the group rating, or 3. Enhanced by multiple notches but must be lower than group rating by 1 notch, or 4. Enhanced by 1-3 notches from standalone rating but must be lower than the group rating, or 5. No notch up 26

100 What are rating factors of hybrid capital instruments? 27

101 CRA s Point of Views The characteristics of hybrid capital instruments of deferrable, subordination make these instruments more flexible than other debt instruments. These characteristics also benefit the issuer during the financial stress scenario. On the other hand, these increase repayment risks to the investors. Combined this two characteristics, hybrid capital instruments will be notched down by 2 notches. Nonetheless, given the limited benefits of hybrid instruments comparing with other common stocks, CRAs generally limit the proportion of maximum hybrid capital instrument in the company s capital structure. 28

102 Maximum Equity Content Non-FI: Not more than 25% of capital (equity + hybrid equity credit) 29

103 TRIS Rating s Guideline for Equity Content of Non-FI High 100% equity Intermediate 50% equity: 50% debt Low 100% debt with subjective adjustment 30

104 Basic Factors for Intermediate Equity Content To have intermediate equity content, hybrid capital instrument must have 1. Long-life at least 20 years remaining until effective maturity date 2. Effective maturity date: 1. Original maturity date of the instrument, or 2. When call option + more than 25 bps step up without replacement capital covenant (RCC), or 3. When call option + more than 100 bps step up 3. Call option should not earlier than 5 years after issue date 31

105 Basic Factors for High Equity Content Converts to common equity in short time (not longer than 3 years) Coupon varies with stock dividend or financial performance Very easy to be mandatorily deferrable (eg. upon breach of financial or rating trigger that are set close to existing level) 32

106 Why 25 bps and 100 bps? TRIS Rating believes that the step up of hybrid instrument by over 25 bps will create a cost pressure for issuer to exercise the call option. So if the call option comes with the step up of bps, the RCC is needed, and it should be legally binding RCC, otherwise it would be effective maturity. When the step up is higher than 100 bps, the cost pressure to issuer will be overwhelm and it will be effective maturity. 33

107 Bank Hybrid Capital Instrument Rating Rating criteria follows BOT guidelines for bank hybrid capital Tier 2 characteristics: Perpetual Subordination Loss absorption mechanism Deferral Factors Definition Notch-down from standalone rating 1. Subordination Debt repayment is lower priority than debenture holders but higher than common stock shareholders Loss absorption mechanism Supplementary loss-absorption at the point of nonviability in terms of write-down or stock conversion 1 3. Deferrable Mandatory or optional deferrable of coupon payments under financial stress. 1 34

108 Hybrid Ratings By TRIS Rating Rating as of 28 August Thanachart Bank Plc. Issuer Rating = AA- Hybrid Tier 2 Capital = A 2. TISCO Bank Plc. Issuer Rating= A Hybrid Tier 2 Capital = BBB+ 3. LH Bank Plc. Issuer Rating =A- Hybrid Tier 2 Capital = BBB Source: TRIS Rating 35

109 Sovereign Rating 36

110 Sovereign rating Ability and willingness of sovereign government to repay debt to non-sovereign bond holders. Not include debts of multilateral institutions such as IMF, World Bank, ADB. Rating factors include quantitative and qualitative factors. Nonetheless, among all, the qualitative which include the credit culture of the government, administrative efficiency of officials, political stability are very important rating factors. 37

111 Crucial Rating Factors of Laos PDR 1. Relatively low commercial external debts comparing with peers. Most external debts are public debts from ADB and G- to-g. 2. Small scale economy and emerging stage of capital market. 3. Political stability but limited data base and updated information. 4. High willingness to comply with international standard with supports and guidance from international organizations. 5. National income linked with commodity prices but increasing portion of income from hydropower sector sold to Thailand. 38

112 Lao Sovereign Rating = BBB+ Thailand national scale Comparable to other ratings in TRIS Rating portfolios Ability and willingness to repay debts of Lao government in terms of Thai-Baht. 39

113 Ratings Private Companies Overseas 40

114 Rating Factors Private Companies Overseas Similar to other issuer rating. Additional consideration: Sovereign risks of country of domicile Transferability and convertibility risks To mitigate transferability and convertibility risks reserve account overseas in USD or other hard currencies. The rating will be assigned in Thai Baht, TRIS Rating scale (Thai scale). 41

115 Could issuer or issue rating of non-sovereign companies higher than sovereign rating? Generally, issuer rating of a non-sovereign company could not higher than sovereign rating of the country of its domicile. Sovereign government always have ability to determine tax rates, impose regulatory requirement that will enable to increase its ability to repay public debts in local currency. Some private companies may have higher issuer rating than government if its overall local currency rating is higher than the government the majority of its revenues generated from overseas revenues mostly are in term of foreign currency. 42

116 Could issuer or issue rating of non-sovereign companies higher than Sovereign Rating? Continued The issue rating of debentures issued by a private company could be higher than sovereign rating if: The standalone rating of the company is higher than sovereign rating The debentures are backed by revenues generated in other countries which will be put into reserve account overseas 43

117 THANK YOU 44