Credit Analysis: Financial Issuers

LEVEL: INTERMEDIATE LEVEL

▪	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

▪	Credit risk of a corporate issuer - Intermediate
▪	Sector drivers - Intermediate
▪	Credit ratings - Intermediate
▪	Default spread and risk - Intermediate

▪	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
▪	Fund managers
▪	Originators
▪	Traders
▪	Fixed income salespeople
▪	Client relationship managers
▪	Institutional investors
▪	Company treasurers

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, 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