Rating advisory

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What is a rating?

The main rating agencies (Standard & Poor's, Fitch, Moody's) evaluate issuers' ability to repay their debts, i.e., to repay the right amounts on the right dates, and assign them a corresponding rating.  They are responsible for assessing the creditworthiness of debt issuers and assign a credit rating, regularly updated .

A credit rating can have a significant impact on a borrower's cost of financing. It enables:

  • lenders and investors to assess credit risk and price it accordingly;
  • issuers to access debt markets at the appropriate cost of funding.

What is the role of rating advisory?

Rating advisory is to facilitate the relationship between issuers and rating agencies in order to obtain the best possible rating for the client so that the latter can borrow under optimal conditions.

Rating Advisory services can be activated for:

  • initial rating assignment, generally ahead of a new bond issuance;
  • review or renewal of an existing credit rating;
  • financial transactions potentially affecting the rating, such as acquisitions, or changes in capital structure.

What are the missions of Rating Advisory teams?

Rating Advisory encompasses several complementary responsibilities designed to support the issuer’s rating strategy.

  • Credit quality assessment (analysis of the issuer’s credit fundamentals, positioning within the rating methodologies and scorecards of the agencies);
  • Recommendations to enhance or preserve the rating (advice on capital structure, financial policy and risk management, identification of rating drivers and areas for potential improvement);
  • Definition of the rating strategy (recommendation on the choice of rating agency(ies), preparation of presentation materials for meetings with analysts, guidance on the communication approach with agencies);
  • Support during interactions with rating agencies;
  • Monitoring methodologies and training.


This advisory support helps issuers better understand rating agency expectations, adjust their financial strategy, and optimize their overall financing costs.

Rating advisory works closely with coverage, bond syndication, DCM and ECM services (primary debt and primary equity), as well as including acquisition financing.
 

ESG rating is usually complementary to traditional rating. It assesses an issuer’s ESG (Environmental, Social, and Governance) performance. It increases the information available, improves  the resulting evaluation, and investment choices.