1. Credit Analysis Fundamentals
Participants gain understanding of the credit rating process by examining the assessment of both operational and financial risks of the business. By the end of the session, participants derive a rating for a case company.
• What is credit analysis?
• Ratings scales
• Default and recovery rates
— Issuer and issue ratings
• Purpose of credit analysis
• Nature of credit risk
— Asymmetric nature of credit risk
— Difference between up / downside of equity and credit
• Credit Analysis - analytical approach
— Key principles: cash based, forward looking, peer group
— Evaluation of business and financial risks
— How to weight different risks
• Business risks
— Key drivers of business risk and their identification
— Macro, industry and company specific evaluation
• Financial risk
— Key components of financial analysis
— Cash flow analysis from a credit point of view
— Various cash flow concepts of rating agencies
— Credit ratios: most common ratios and their application
— Credit ratios according to the ratings category
— Financial policy analysis
• Rating Agencies: overview
2. Credit Analysis Issues
This program analyzes the financials from the credit perspective, making technical adjustments to the main numbers to accurately reflect the creditworthiness of a company, project or going concern. In addition, the session covers debt structuring issues.
• Complex items from the standpoint of credit analysis
— Credit fundamentals summary recap
— Credit approach to adjustments to financial statements
— Impact on credit quality
— Rating agency view
— Pension obligations
— Operating leases
— Hybrid securities: equity or debt?
— Off balance sheet obligations
— Capitalized interest
• Structural issues in credit analysis
— The importance of structures and assessment frameworks
— Notching up / down of debt
— Contractual subordination
— Structural subordination
— Parent / subsidiary link
— Rating agency methodology
• Documentation – covenants
— Concept of covenants
— Type and benefit of covenants
About the Instructor
Dr. Ronald Chung
Instructor - APAC
Dr. Ronald Chung is a leading expert in financial markets and has close to 20 years of experience conducting training for Wealth Management, Investment Banking and Corporate Banking.
He has delivered training courses in areas such as; Financial Products, Valuation and Modelling Techniques, Derivative Solutions and many more. Ron has worked with major multinational and Chinese financial institutions including Barclays, DBS, HSBC, Morgan Stanley, Standard Chartered Bank, UBS, China Construction Bank and China Merchant Bank.
Prior to returning to the Asia Pacific region, Dr. Chung was a Senior Consultant for the Treasury Management Association (now Association for Financial Professionals), USA. He worked with corporations and financial institutions on treasury services and product offerings. He also designed training programs for finance professionals in collaboration with university partners, including; Dartmouth College, Georgetown University, Johns Hopkins University, Stanford University and the University of Michigan. Ron has consulted for Fortune 500 clients such as AMD, AT&T, Corning, Nokia, P&G, Pfizer, etc.
In working with these institutions, he worked with various private banking groups, graduate and intern programs, and front office groups.
Ron is fluent in English, Putonghua and Cantonese.
Rating - General
Material presented will be basic and of interest to a general audience having no background in the area.