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June 28, 2001
By
Mindy Gratwicke
Website:
http://www.1st-free-credit-report.com
>
The corporate credit rating process in a nut shell
The debt securities issued by a public corporation will generally be rated by, one or more of four major corporate credit rating agencies, which are Standard & Poor’s, Moody’s, Duff & Phelps, and Fitch Investor Services. In most instances the corporate credit rating agencies will rate the debt of the corporation for any public issue larger than $50 million US with or without the cooperation, request or permission of the issuer. Standard & Poor’s defines public issues as those debt issues, which are registered with the SEC, those with future registration rights, and other 144A deals that have broad distribution.
A corporate credit rating is the opinion of the rating agencies regarding the general creditworthiness of the company. The corporate credit rating is a function of risk factors to which the company is subject. It is simply an objective evaluation of the company and it’s ability to meet the obligations of the security as well as its ability to repay the debt. The major credit rating agencies will also provide corporate credit ratings for the specific issuer as opposed to the offering. Many times the issuer has no outstanding debt but still requires a rating. This rating is an opinion regarding the company’s overall capacity and willingness to meet its financial obligations. Opinions regarding the corporate credit rating are not specific to any particular security. It does not take into consideration the specifics of any individual security. The rating does not take into consideration any particular credit enhancement the company may have available. These corporate credit ratings are generally used for letters-of-credit and lease negotiations.
For
more information on corporate credit rating - click here!
> About The Author:Mindy Gratwicke is a successful author and the
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