Global Structurally Enhanced Corporate Bonds Rating Criteria – Revised Methodology Published
Johannesburg, 30 September 2016 — Global Credit Ratings (“GCR”) has published its updated Global Structurally Enhanced Corporate Bonds Rating Criteria.
GCR has updated its Global Structurally Enhanced Corporate Bonds Rating Criteria (the “Criteria”). The Criteria applies to senior secured securities issued by corporates that benefit from certain structural enhancements. These enhancements can, for example, take the form of cash reserves, guarantees or transaction specific security packages. The rating of structurally enhanced corporate bonds is derived by applying a notching approach, starting from the long term, corporate credit rating of the intended issuer of such bonds. In determining the appropriate number of rating notches to be applied, GCR compares the estimated overall recovery rate after a potential default of the bonds with the assumed average corporate senior unsecured debt obligation recovery rate. If overall estimated recoveries are higher than the assumed average recovery rate, a notching uplift may be applicable in line with the recoveries notching table detailed in the Criteria. Where relevant, the credit quality of the transaction parties facilitating structural enhancements (e.g. a guarantee) relating to the transaction is taken into account. In some instances, dependent upon the rating of the underlying corporate, the rating of the secured obligation may be capped.
The rating of the senior secured structurally enhanced corporate bonds incorporates recoveries potentially arising from the structural enhancements (e.g. the proceeds of a guarantee claim payment). In effect, the rating accorded to these securities is an expected loss rating (which is a function of probability of default and loss severity), and relates to an assessment of the ability to meet ultimate (as opposed to timely) payment of interest and principal. Such a rating can therefore not be fully compared with a traditional corporate credit rating (the latter, which is also an expression of expected loss, but refers to probability of default and an average historical loss given default (LGD) for generalised senior unsecured debt). Where a tap issue occurs, GCR expects to receive sufficient notice prior to issuance in order to carry out its analysis to accord and/or affirm the ratings of the bonds. Where such notice is not provided, GCR may withdraw the ratings at its discretion.
The Criteria lays down the fundamentals for structurally enhanced senior secured corporate bond issues that are not covered by other specific GCR rating criteria reports. Each transaction will be accompanied by a transaction specific report that will disclose any additional observations, or deviations from the Criteria.
The Criteria is an update to the version published in October 2015. There are no significant amendments to the Criteria. The update of this Criteria will not have an impact on any existing transactions that have been rated under it. Going forward, all new transactions will be rated using this updated Criteria.
GLOSSARY OF TERMS/ACRONYMS USED IN THIS DOCUMENT AS PER GCR’S STRUCTURED FINANCE GLOSSARY
Agent
An agreement where one party (agent) concludes a juristic act on behalf of the other (principal). The agent undertakes to perform a task or mandate on behalf of the principal.
Bond
A long term debt instrument issued by either: a company, institution or the government to raise funds.
Claim
A formal request or demand.
Corporate Credit Rating
A credit rating accorded to a corporate entity.
Credit
A contractual agreement in which a borrower receives something of value now, and agrees to repay the lender at some date in the future, generally with interest. The term also refers to the borrowing capacity of an individual or company
Credit Rating
An opinion regarding the creditworthiness of an entity, a security or financial instrument, or an issuer of securities or financial instruments, using an established and defined ranking system of rating categories.
Credit Risk
The probability or likelihood that a borrower or issuer will not meet its debt obligations. Credit Risk can further be separated between current credit risk (immediate) and potential credit risk (deferred).
Debt
An obligation to repay a sum of money.
Default
A default occurs when: 1.) The Borrower is unable to repay its debt obligations in full; 2.) A credit-loss event such as charge-off, specific provision or distressed restructuring involving the forgiveness or postponement of obligations; 3.) The borrower is past due more than X days on any debt obligations as defined in the transaction documents; 4.) The obligor has filed for bankruptcy or similar protection from creditors.
Guarantee
An undertaking for performance of another’s obligations in event of default.
Insurance
Provides protection against a possible eventuality.
International Scale Rating LC
International local currency (International LC) ratings measure the likelihood of repayment in the currency of the jurisdiction in which the issuer is domiciled. Therefore, the rating does not take into account the possibility that it will not be able to convert local currency into foreign currency or make transfers between sovereign jurisdictions.
Issuer
The party indebted or the person making repayments for its borrowings.
Liability
All financial claims, debts or potential losses incurred by an individual or an organisation.
Liquidity
The ability to repay short-term obligations or short-term availability of liquid assets to a market or entity.
Liquidity Risk
The risk that a company may not be able to meet its financial obligations or other operational cash requirements due to an inability to timeously realise cash from its assets. Regarding securities, the risk that a financial instrument cannot be traded at its market price due to the size, structure or efficiency of the market.
Long-Term Rating
A long term rating reflects an issuer’s ability to meet its financial obligations over the following three to five year period, including interest payments and debt redemptions. This encompasses an evaluation of the organisation’s current financial position, as well as how the position may change in the future with regard to meeting longer term financial obligations.
Loss
A tangible or intangible, financial or non-financial loss of economic value.
Market
An assessment of the property value, with the value being compared to similar properties in the area.
Notching
A movement in ratings.
Obligation
The title given to the legal relationship that exists between parties to an agreement when they acquire personal rights against each other for entitlement to perform.
Principal
The total amount borrowed or lent, e.g. the face value of a bond, excluding interest.
Proceeds
Funds from issuance of debt securities or sale of assets.
Provision
An amount set aside for expected losses to be incurred by a creditor.
Recovery
The action or process of regaining possession or control of something lost. To recoup losses.
Reserves
A portion of funds allocated for an eventuality.
Securities
Various instruments used in the capital market to raise funds.
Security
An asset deposited or pledged as a guarantee of the fulfilment of an undertaking or the repayment of a loan, to be forfeited in case of default.
Security Package
Security offered to Noteholders for debt securities issued that should increase the recoveries in an event of default.
Senior
A security that has a higher repayment priority than junior securities.
Senior Unsecured Debt
Securities that have priority ahead of all other unsecured or subordinated debt for the payment in the event of default.
Short-Term Rating
A short term rating is an opinion of an issuer’s ability to meet all financial obligations over the upcoming 12 month period, including interest payments and debt redemptions.
Structural Enhancement
This may be provided as credit enhancement or as various other methods to enhance the security of a transaction such as performance triggers, short revolving periods et cetera.
Structured Finance
A method of raising funds in the capital markets. A Structured Finance transaction is established to accomplish certain funding objectives whist reducing risk.
Transaction
A transaction that enables an Issuer to issue debt securities in the capital markets. A debt issuance programme that allows an Issuer the continued and flexible issuance of several types of securities in accordance with the programme terms and conditions.
Account Bank
A bank where the transaction account is held.
Agent
An agreement where one party (agent) concludes a juristic act on behalf of the other (principal). The agent undertakes to perform a task or mandate on behalf of the principal.
Asset
An item with economic value that an entity owns or controls.
Bond
A long term debt instrument issued by either: a company, institution or the government to raise funds.
Bondholder
Investor of capital market securities.
Business Rescue
A term under the Companies Act 71 of 2008 (South Africa) Chapter 6 to remedy an entity that is likely to become insolvent. Entities that are likely to become insolvent (where liabilities exceed assets) or unlikely to be able to pay their debts as they fall due and payable in the coming six months.
Capital
The sum of money that is used to generate proceeds.
Claim
A formal request or demand.
Collateral
An asset pledged as security in event of default.
Corporate Credit Rating
A credit rating accorded to a corporate entity.
Credit
A contractual agreement in which a borrower receives something of value now, and agrees to repay the lender at some date in the future, generally with interest. The term also refers to the borrowing capacity of an individual or company
Credit Rating
An opinion regarding the creditworthiness of an entity, a security or financial instrument, or an issuer of securities or financial instruments, using an established and defined ranking system of rating categories.
Credit Risk
The probability or likelihood that a borrower or issuer will not meet its debt obligations. Credit Risk can further be separated between current credit risk (immediate) and potential credit risk (deferred).
Creditor
A credit provider that is owed debt obligations by a debtor.
Debt
An obligation to repay a sum of money.
Default
A default occurs when: 1.) The Borrower is unable to repay its debt obligations in full; 2.) A credit-loss event such as charge-off, specific provision or distressed restructuring involving the forgiveness or postponement of obligations; 3.) The borrower is past due more than X days on any debt obligations as defined in the transaction documents; 4.) The obligor has filed for bankruptcy or similar protection from creditors.
Enforceable
To make sure people do what is required by a law or rule et cetera.
Enforcement
To make sure people do what is required by a law or rule et cetera.
Exposure
Exposure is the amount of risk the holder of an asset or security is faced with as a consequence of holding the security or asset. For a company, its exposure may relate to a particular product class or customer grouping. Exposure may also arise from an overreliance on one source of funding.
Guarantee
An undertaking for performance of another’s obligations in event of default.
Guarantor
A party that gives the guarantee.
Haircut
The percentage by which the market value of a security used as collateral for a loan is reduced. The size of the haircut reflects the expected ease of selling the security and the likely reduction necessary to the realised value relative to the fair value.
Insolvency
When an entity’s liabilities exceed its assets.
Insurance
Provides protection against a possible eventuality.
International Scale Rating LC
International local currency (International LC) ratings measure the likelihood of repayment in the currency of the jurisdiction in which the issuer is domiciled. Therefore, the rating does not take into account the possibility that it will not be able to convert local currency into foreign currency or make transfers between sovereign jurisdictions.
Irrevocable
Not able to be changed, reversed, recovered and final.
Issuer
The party indebted or the person making repayments for its borrowings.
Legal Opinion
An opinion regarding the validity and enforceable of a transaction’s legal documents.
Lender
A credit provider that is owed debt obligations by a debtor.
Liability
All financial claims, debts or potential losses incurred by an individual or an organisation.
Liquidity
The ability to repay short-term obligations or short-term availability of liquid assets to a market or entity.
Liquidity Risk
The risk that a company may not be able to meet its financial obligations or other operational cash requirements due to an inability to timeously realise cash from its assets. Regarding securities, the risk that a financial instrument cannot be traded at its market price due to the size, structure or efficiency of the market.
Long-Term Rating
A long term rating reflects an issuer’s ability to meet its financial obligations over the following three to five year period, including interest payments and debt redemptions. This encompasses an evaluation of the organisation’s current financial position, as well as how the position may change in the future with regard to meeting longer term financial obligations.
Loss
A tangible or intangible, financial or non-financial loss of economic value.
Market
An assessment of the property value, with the value being compared to similar properties in the area.
National Scale Rating
The national scale provides a relative measure of creditworthiness for rated entities only within the country concerned. Under this rating scale, a ‘AAA’ long term national scale rating will typically be assigned to the lowest relative risk within that country, which in most cases will be the sovereign state.
Notching
A movement in ratings.
Obligation
The title given to the legal relationship that exists between parties to an agreement when they acquire personal rights against each other for entitlement to perform.
Pari Passu
Side by side; at the same rate or on an equal footing. Securities issued with a pari passu clause have rights and privileges that are equivalent to those of existing securities of the same class.
Pledge
Constituted by an agreement between the pledgor, who undertakes to deliver the article, and the pledgee, and subsequent delivery of the property in question as security for debt. A pledge is only applicable to movable property.
Principal
The total amount borrowed or lent, e.g. the face value of a bond, excluding interest.
Proceeds
Funds from issuance of debt securities or sale of assets.
Property
Movable or immovable asset.
Provision
An amount set aside for expected losses to be incurred by a creditor.
Ranking
A priority applied to obligations in order of seniority.
Rated Securities
Debt securities that have been accorded a credit rating.
Real Estate
Property that consists of land and / or buildings.
Recovery
The action or process of regaining possession or control of something lost. To recoup losses.
Reserves
A portion of funds allocated for an eventuality.
Securities
Various instruments used in the capital market to raise funds.
Security
An asset deposited or pledged as a guarantee of the fulfilment of an undertaking or the repayment of a loan, to be forfeited in case of default.
Security Package
Security offered to Noteholders for debt securities issued that should increase the recoveries in an event of default.
Senior
A security that has a higher repayment priority than junior securities.
Senior Unsecured Debt
Securities that have priority ahead of all other unsecured or subordinated debt for the payment in the event of default.
Short-Term Rating
A short term rating is an opinion of an issuer’s ability to meet all financial obligations over the upcoming 12 month period, including interest payments and debt redemptions.
Structural Enhancement
This may be provided as credit enhancement or as various other methods to enhance the security of a transaction such as performance triggers, short revolving periods et cetera.
Structured Finance
A method of raising funds in the capital markets. A Structured Finance transaction is established to accomplish certain funding objectives whist reducing risk.
Surveillance
Process of monitoring a transaction according to triggers, covenants and key performance indicators.
Transaction
A transaction that enables an Issuer to issue debt securities in the capital markets. A debt issuance programme that allows an Issuer the continued and flexible issuance of several types of securities in accordance with the programme terms and conditions.
ALL GCR CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS, TERMS OF USE OF SUCH RATINGS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS, TERMS OF USE AND DISCLAIMERS BY FOLLOWING THIS LINK:HTTP://GCRRATINGS.COM. IN ADDITION, RATING SCALES AND DEFINITIONS ARE AVAILABLE ON GCR’S PUBLIC WEB SITE AT WWW.GCRRATINGS.COM/RATING_INFORMATION. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. GCR's CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THIS SITE.
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.
Global Structurally Enhanced Corporate Bonds Rating Criteria – Revised Methodology Published
Lagos, 30 September 2016 — Global Credit Ratings (“GCR”) has published its updated Global Structurally Enhanced Corporate Bonds Rating Criteria.
GCR has updated its Global Structurally Enhanced Corporate Bonds Rating Criteria (the “Criteria”). The Criteria applies to senior secured securities issued by corporates that benefit from certain structural enhancements. These enhancements can, for example, take the form of cash reserves, guarantees or transaction specific security packages. The rating of structurally enhanced corporate bonds is derived by applying a notching approach, starting from the long term, corporate credit rating of the intended issuer of such bonds. In determining the appropriate number of rating notches to be applied, GCR compares the estimated overall recovery rate after a potential default of the bonds with the assumed average corporate senior unsecured debt obligation recovery rate. If overall estimated recoveries are higher than the assumed average recovery rate, a notching uplift may be applicable in line with the recoveries notching table detailed in the Criteria. Where relevant, the credit quality of the transaction parties facilitating structural enhancements (e.g. a guarantee) relating to the transaction is taken into account. In some instances, dependent upon the rating of the underlying corporate, the rating of the secured obligation may be capped.
The rating of the senior secured structurally enhanced corporate bonds incorporates recoveries potentially arising from the structural enhancements (e.g. the proceeds of a guarantee claim payment). In effect, the rating accorded to these securities is an expected loss rating (which is a function of probability of default and loss severity), and relates to an assessment of the ability to meet ultimate (as opposed to timely) payment of interest and principal. Such a rating can therefore not be fully compared with a traditional corporate credit rating (the latter, which is also an expression of expected loss, but refers to probability of default and an average historical loss given default (LGD) for generalised senior unsecured debt). Where a tap issue occurs, GCR expects to receive sufficient notice prior to issuance in order to carry out its analysis to accord and/or affirm the ratings of the bonds. Where such notice is not provided, GCR may withdraw the ratings at its discretion.
The Criteria lays down the fundamentals for structurally enhanced senior secured corporate bond issues that are not covered by other specific GCR rating criteria reports. Each transaction will be accompanied by a transaction specific report that will disclose any additional observations, or deviations from the Criteria.
The Criteria is an update to the version published in October 2015. There are no significant amendments to the Criteria. The update of this Criteria will not have an impact on any existing transactions that have been rated under it. Going forward, all new transactions will be rated using this updated Criteria.
GLOSSARY OF TERMS/ACRONYMS USED IN THIS DOCUMENT AS PER GCR’S STRUCTURED FINANCE GLOSSARY
Agent
An agreement where one party (agent) concludes a juristic act on behalf of the other (principal). The agent undertakes to perform a task or mandate on behalf of the principal.
Bond
A long term debt instrument issued by either: a company, institution or the government to raise funds.
Claim
A formal request or demand.
Corporate Credit Rating
A credit rating accorded to a corporate entity.
Credit
A contractual agreement in which a borrower receives something of value now, and agrees to repay the lender at some date in the future, generally with interest. The term also refers to the borrowing capacity of an individual or company
Credit Rating
An opinion regarding the creditworthiness of an entity, a security or financial instrument, or an issuer of securities or financial instruments, using an established and defined ranking system of rating categories.
Credit Risk
The probability or likelihood that a borrower or issuer will not meet its debt obligations. Credit Risk can further be separated between current credit risk (immediate) and potential credit risk (deferred).
Debt
An obligation to repay a sum of money.
Default
A default occurs when: 1.) The Borrower is unable to repay its debt obligations in full; 2.) A credit-loss event such as charge-off, specific provision or distressed restructuring involving the forgiveness or postponement of obligations; 3.) The borrower is past due more than X days on any debt obligations as defined in the transaction documents; 4.) The obligor has filed for bankruptcy or similar protection from creditors.
Guarantee
An undertaking for performance of another’s obligations in event of default.
Insurance
Provides protection against a possible eventuality.
International Scale Rating LC
International local currency (International LC) ratings measure the likelihood of repayment in the currency of the jurisdiction in which the issuer is domiciled. Therefore, the rating does not take into account the possibility that it will not be able to convert local currency into foreign currency or make transfers between sovereign jurisdictions.
Issuer
The party indebted or the person making repayments for its borrowings.
Liability
All financial claims, debts or potential losses incurred by an individual or an organisation.
Liquidity
The ability to repay short-term obligations or short-term availability of liquid assets to a market or entity.
Liquidity Risk
The risk that a company may not be able to meet its financial obligations or other operational cash requirements due to an inability to timeously realise cash from its assets. Regarding securities, the risk that a financial instrument cannot be traded at its market price due to the size, structure or efficiency of the market.
Long-Term Rating
A long term rating reflects an issuer’s ability to meet its financial obligations over the following three to five year period, including interest payments and debt redemptions. This encompasses an evaluation of the organisation’s current financial position, as well as how the position may change in the future with regard to meeting longer term financial obligations.
Loss
A tangible or intangible, financial or non-financial loss of economic value.
Market
An assessment of the property value, with the value being compared to similar properties in the area.
Notching
A movement in ratings.
Obligation
The title given to the legal relationship that exists between parties to an agreement when they acquire personal rights against each other for entitlement to perform.
Principal
The total amount borrowed or lent, e.g. the face value of a bond, excluding interest.
Proceeds
Funds from issuance of debt securities or sale of assets.
Provision
An amount set aside for expected losses to be incurred by a creditor.
Recovery
The action or process of regaining possession or control of something lost. To recoup losses.
Reserves
A portion of funds allocated for an eventuality.
Securities
Various instruments used in the capital market to raise funds.
Security
An asset deposited or pledged as a guarantee of the fulfilment of an undertaking or the repayment of a loan, to be forfeited in case of default.
Security Package
Security offered to Noteholders for debt securities issued that should increase the recoveries in an event of default.
Senior
A security that has a higher repayment priority than junior securities.
Senior Unsecured Debt
Securities that have priority ahead of all other unsecured or subordinated debt for the payment in the event of default.
Short-Term Rating
A short term rating is an opinion of an issuer’s ability to meet all financial obligations over the upcoming 12 month period, including interest payments and debt redemptions.
Structural Enhancement
This may be provided as credit enhancement or as various other methods to enhance the security of a transaction such as performance triggers, short revolving periods et cetera.
Structured Finance
A method of raising funds in the capital markets. A Structured Finance transaction is established to accomplish certain funding objectives whist reducing risk.
Transaction
A transaction that enables an Issuer to issue debt securities in the capital markets. A debt issuance programme that allows an Issuer the continued and flexible issuance of several types of securities in accordance with the programme terms and conditions.
Account Bank
A bank where the transaction account is held.
Agent
An agreement where one party (agent) concludes a juristic act on behalf of the other (principal). The agent undertakes to perform a task or mandate on behalf of the principal.
Asset
An item with economic value that an entity owns or controls.
Bond
A long term debt instrument issued by either: a company, institution or the government to raise funds.
Bondholder
Investor of capital market securities.
Business Rescue
A term under the Companies Act 71 of 2008 (South Africa) Chapter 6 to remedy an entity that is likely to become insolvent. Entities that are likely to become insolvent (where liabilities exceed assets) or unlikely to be able to pay their debts as they fall due and payable in the coming six months.
Capital
The sum of money that is used to generate proceeds.
Claim
A formal request or demand.
Collateral
An asset pledged as security in event of default.
Corporate Credit Rating
A credit rating accorded to a corporate entity.
Credit
A contractual agreement in which a borrower receives something of value now, and agrees to repay the lender at some date in the future, generally with interest. The term also refers to the borrowing capacity of an individual or company
Credit Rating
An opinion regarding the creditworthiness of an entity, a security or financial instrument, or an issuer of securities or financial instruments, using an established and defined ranking system of rating categories.
Credit Risk
The probability or likelihood that a borrower or issuer will not meet its debt obligations. Credit Risk can further be separated between current credit risk (immediate) and potential credit risk (deferred).
Creditor
A credit provider that is owed debt obligations by a debtor.
Debt
An obligation to repay a sum of money.
Default
A default occurs when: 1.) The Borrower is unable to repay its debt obligations in full; 2.) A credit-loss event such as charge-off, specific provision or distressed restructuring involving the forgiveness or postponement of obligations; 3.) The borrower is past due more than X days on any debt obligations as defined in the transaction documents; 4.) The obligor has filed for bankruptcy or similar protection from creditors.
Enforceable
To make sure people do what is required by a law or rule et cetera.
Enforcement
To make sure people do what is required by a law or rule et cetera.
Exposure
Exposure is the amount of risk the holder of an asset or security is faced with as a consequence of holding the security or asset. For a company, its exposure may relate to a particular product class or customer grouping. Exposure may also arise from an overreliance on one source of funding.
Guarantee
An undertaking for performance of another’s obligations in event of default.
Guarantor
A party that gives the guarantee.
Haircut
The percentage by which the market value of a security used as collateral for a loan is reduced. The size of the haircut reflects the expected ease of selling the security and the likely reduction necessary to the realised value relative to the fair value.
Insolvency
When an entity’s liabilities exceed its assets.
Insurance
Provides protection against a possible eventuality.
International Scale Rating LC
International local currency (International LC) ratings measure the likelihood of repayment in the currency of the jurisdiction in which the issuer is domiciled. Therefore, the rating does not take into account the possibility that it will not be able to convert local currency into foreign currency or make transfers between sovereign jurisdictions.
Irrevocable
Not able to be changed, reversed, recovered and final.
Issuer
The party indebted or the person making repayments for its borrowings.
Legal Opinion
An opinion regarding the validity and enforceable of a transaction’s legal documents.
Lender
A credit provider that is owed debt obligations by a debtor.
Liability
All financial claims, debts or potential losses incurred by an individual or an organisation.
Liquidity
The ability to repay short-term obligations or short-term availability of liquid assets to a market or entity.
Liquidity Risk
The risk that a company may not be able to meet its financial obligations or other operational cash requirements due to an inability to timeously realise cash from its assets. Regarding securities, the risk that a financial instrument cannot be traded at its market price due to the size, structure or efficiency of the market.
Long-Term Rating
A long term rating reflects an issuer’s ability to meet its financial obligations over the following three to five year period, including interest payments and debt redemptions. This encompasses an evaluation of the organisation’s current financial position, as well as how the position may change in the future with regard to meeting longer term financial obligations.
Loss
A tangible or intangible, financial or non-financial loss of economic value.
Market
An assessment of the property value, with the value being compared to similar properties in the area.
National Scale Rating
The national scale provides a relative measure of creditworthiness for rated entities only within the country concerned. Under this rating scale, a ‘AAA’ long term national scale rating will typically be assigned to the lowest relative risk within that country, which in most cases will be the sovereign state.
Notching
A movement in ratings.
Obligation
The title given to the legal relationship that exists between parties to an agreement when they acquire personal rights against each other for entitlement to perform.
Pari Passu
Side by side; at the same rate or on an equal footing. Securities issued with a pari passu clause have rights and privileges that are equivalent to those of existing securities of the same class.
Pledge
Constituted by an agreement between the pledgor, who undertakes to deliver the article, and the pledgee, and subsequent delivery of the property in question as security for debt. A pledge is only applicable to movable property.
Principal
The total amount borrowed or lent, e.g. the face value of a bond, excluding interest.
Proceeds
Funds from issuance of debt securities or sale of assets.
Property
Movable or immovable asset.
Provision
An amount set aside for expected losses to be incurred by a creditor.
Ranking
A priority applied to obligations in order of seniority.
Rated Securities
Debt securities that have been accorded a credit rating.
Real Estate
Property that consists of land and / or buildings.
Recovery
The action or process of regaining possession or control of something lost. To recoup losses.
Reserves
A portion of funds allocated for an eventuality.
Securities
Various instruments used in the capital market to raise funds.
Security
An asset deposited or pledged as a guarantee of the fulfilment of an undertaking or the repayment of a loan, to be forfeited in case of default.
Security Package
Security offered to Noteholders for debt securities issued that should increase the recoveries in an event of default.
Senior
A security that has a higher repayment priority than junior securities.
Senior Unsecured Debt
Securities that have priority ahead of all other unsecured or subordinated debt for the payment in the event of default.
Short-Term Rating
A short term rating is an opinion of an issuer’s ability to meet all financial obligations over the upcoming 12 month period, including interest payments and debt redemptions.
Structural Enhancement
This may be provided as credit enhancement or as various other methods to enhance the security of a transaction such as performance triggers, short revolving periods et cetera.
Structured Finance
A method of raising funds in the capital markets. A Structured Finance transaction is established to accomplish certain funding objectives whist reducing risk.
Surveillance
Process of monitoring a transaction according to triggers, covenants and key performance indicators.
Transaction
A transaction that enables an Issuer to issue debt securities in the capital markets. A debt issuance programme that allows an Issuer the continued and flexible issuance of several types of securities in accordance with the programme terms and conditions.
ALL GCR CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS, TERMS OF USE OF SUCH RATINGS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS, TERMS OF USE AND DISCLAIMERS BY FOLLOWING THIS LINK:HTTP://GCRRATINGS.COM. IN ADDITION, RATING SCALES AND DEFINITIONS ARE AVAILABLE ON GCR’S PUBLIC WEB SITE AT WWW.GCRRATINGS.COM/RATING_INFORMATION. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. GCR's CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THIS SITE.
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.
GCR uses traffic log cookies to identify which pages are being used. This helps us tailor our website to visitor needs. GCR only uses cookies for analytical purposes. By clicking “Accept”, you consent to the use of ALL the cookies.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
These cookies are necessary for the website to function and cannot be switched off in our systems. They are normally set in response to actions made by you, amounting to a request for services, such as setting your privacy preferences, logging-in or completing forms. You can set your browser to block or alert you about these cookies, but please note that parts of the website may no longer function correctly. Note: These cookies do not store any personally identifiable information.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors navigate the site. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies, the site will not be performance optimised for your use.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
