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Developing a Credit Rationale Course

Aims

The overarching aim of the course is to make delegates step back from the detail of day to day ratio calculations and the administration of the details of credit to look at the broader macro, industrial and structural issues which together contribute to a company’s credit profile and which define the company’s ability to compete profitably and so define its credit risk.

Over the three days we will review the core disciplines involved in corporate credit analysis – namely management and business risk analysis; understanding financial risk and leverage; understanding the impact of corporate structure on probability of default and recovery rates; the rating agency rating scales and liquidity analysis.

As the course progresses, working in teams delegates will progressively develop a rating analysis of the central case study company.


Objectives

At the end of the workshop, delegates will:

  • have a clear analytical framework and set of analytical tools to apply to day-to-day credit analysis
  • understand the importance of comparative strategy and business analysis
  • have a clear understanding of the importance of strategy in establishing the framework for credit quality and a strong understanding of the leading indicators of corporate failure
  • be able to effectively interface with management at investee companies and involve them in proactively and critically assessing management and the board’s composition and effectiveness
  • be able to constructively participate in documentation and structuring dialog

Who should attend?

  • Portfolio managers
  • Equity and fixed income analysts
  • Graduate entrants
  • Client relationship managers

Day 1: Qualitative analysis - strategy, management and business model

  • Strategy and qualitative analysis tools
  • Assessing management
  • Risk analysis techniques
  • Ratio analysis

Day 2: Structured lending

  • Rating agency methodology
  • Metric normalisation
  • Corporate funding and structure
  • Corporate structure and subordination

Day 3: Forecasting and corporate structure

  • Liquidity review
  • External factors - parental support, sovereign rating impact and covenants
  • Develop and defend a credit rationale