GCR has updated its Criteria for Rating Trade Receivables-Backed Securitisations. The criteria report details GCR’s approach to rating trade receivables-backed securitisations. Each trade receivables securitisation is unique and the methodology may require certain adjustments depending on the specifics of each transaction, however, the following general approach can be used as a guideline for all trade receivables transactions. GCR considers both qualitative and quantitative factors in its approach. In addition to the review of the originator/servicer and underlying collateral/obligor characteristics, GCR analyses the legal and structural issues as well as the operational capabilities of all key transaction parties in determining the appropriateness of credit enhancement provided before according a rating to a trade receivables transaction.
The amendments are principally in respect of the concentration floor and multiples applied in respect of the credit enhancement for a trade receivables transaction. As detailed above, this criteria acts as a guide to applying the analysis, where certain structural features are in place, the analysis may deviate from the criteria. Where such deviation occurs it will be detailed within the accompanying transaction rating report.
All new trade receivables transactions rated by GCR will be rated under the updated criteria. Existing transactions will be rated under the updated criteria within the next 6 months. Although it is not expected there will be significant rating movement, some rating movement may occur due to the revised criteria and not specifically due to credit reasons, and as such all existing transactions will be placed on Rating Watch.
The updated criteria report is available at www.globalratings.net
CREDIT RATINGS ISSUED AND RESEARCH PUBLICATIONS PUBLISHED BY GCR, ARE GCR’S OPINIONS, AS AT THE DATE OF ISSUE OR PUBLICATION THEREOF, OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. GCR DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL AND/OR FINANCIAL OBLIGATIONS AS THEY BECOME DUE. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: FRAUD, MARKET LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND GCR’S OPINIONS INCLUDED IN GCR’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND GCR’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND GCR’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL OR HOLD PARTICULAR SECURITIES. NEITHER GCR’S CREDIT RATINGS, NOR ITS PUBLICATIONS, COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. GCR ISSUES ITS CREDIT RATINGS AND PUBLISHES GCR’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING OR SALE.