Credit Analysis: Financial Issuers

Types of Credit Analysis for Lenders and Investors
  • Recap of the Merton model, measuring distance to default
  • Spread/probability of default
  • Estimated recovery rate
  • Upgrade/downgrade probability
  • Goals and functions of credit analysis
  • Relationship with economic, equity analysis
Growth of the Credit Market and Regulatory Framework
  • Bank disintermediation and euro market
  • Credit risk dispersion: CDS and structuring
  • Indices: Lehman Aggregate, iBoxx, iTraxx
  • Size and structure of the credit market
  • BIS regulations: Basel II and III, internal rating
Issuer Analysis
  • Fundamentals: EBITDA, EBIT, free cash flows, Earnings
  • Treasury flow analysis
  • Balance sheet analysis
  • Adjustments: off-balance sheet liabilities, derivatives, leasing
  • Ratios: importance and appreciation
  • Analysing strategy, special situations, LBOs
  • Risk analysis: social risk, environmental risk, political risk, etc.
  • Practical Workshop
  • Analyse companies in various sectors
Credit Rating Methodologies
  • Critique of rating agencies: pros and cons, leads or lags?
  • Added value of credit analyses: perspective
  • Transition matrices: evolution
  • Regulatory trends
  • Practical Workshop
  • Analyse companies in various sectors
Spread Analysis: Coming to a Recommendation
  • Liquidity, size, market makers
  • Option adjusted spread: callable bonds, MBS
  • Guarantees, covenants…
  • Reference: Govies, Swaps…
  • Comparison: sector, industry, rating
  • Practical Workshop
  • Recap and recommendations

  • Analyse an issuer’s financial solidity in order to asses its credit risk
  • Evaluate a security’s features in order to gauge its specific risk
  • Calculate the credit component of a spread and make a risk/value comparison
  • Use state-of-the-art techniques to make investment recommendations
  • Learn full, comprehensive methods
  • Learn how to spot the fundamental elements (credit drivers) of credit risk
  • Learn methods by sector that will allow you to make relative comparisons of issuers and securities
  • Operational recap of all the techniques that will allow you to successfully predict the relative or absolute variations of a spread
  • Credit analysts
  • Bond and money managers
  • Originators, traders, fixed income salespeople
  • Institutional investors
  • Company treasurers
  • Middle office personnel
  • Risk managers
  • People in charge of commercial relationships with financial institutions
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