Credit Ratings Advisory Q3 2017

Transcription

1 Credit Ratings Advisory Q3 2017

2 What we do Credit ratings assessment For unrated clients we assess the likely outcome of a credit ratings process to support funding options advice or debt capital raising/refinancing transactions. We also optimise the execution of private, unrated debt capital raising/refinancing transactions by assessing and communicating client credit quality to prospective investors and other transaction stakeholders. Ratings execution We support our clients throughout all stages of a ratings process: engaging with agencies, preparing for agency interviews, ensuring all appropriate supporting information and analysis is prepared and presented to agencies in the best possible light, and helping clients communicate ratings results to internal and external stakeholders. Credit optimisation Across markets, from secured corporate debt to project finance, we structure transactions to optimise credit outcomes. We help clients achieve the right balance between higher credit quality (lower cost of debt) and the increased sponsor financial risk, loss of control and higher capital intensity that credit enhancement can require. Credit Ratings Advisory 2

3 Scenario testing We conduct scenario analyses: advice on the ratings impacts of business plan changes or proposed transactions such as mergers, acquisitions, carveouts/jvs, dividend recaps. Infrastructure debt valuation We support institutional investors with credit assessments of long-term, illiquid debt as part of our Independent Valuations service offering (credit assessment, pricing and modelling). Internal Ratings Systems We support banks and insurance companies with the independent validation of Internal Ratings Systems (IRS), and the development of new IRSs where required. Credit Ratings Advisory

4 Why work with us? 1 Credibility Our ratings advisory team joined EY from Fitch Ratings, Standard & Poor s and Moody s, giving us unique experience and breadth in the services we provide 2 Expertise The breadth of transactions we advise on means we remain in continuous dialogue with funders and rating agencies Our experience covers the full spectrum of issuers from sovereign and sub-sovereign, corporates and leveraged finance, project finance and securitisation Confidential nt ial all rights reserved Ernst t& Young LLP 2016 Credit Ratings Advisory 4

5 Our team Anton Krawchenko Director T: M: E: Francesco Cauli Associate Director T: M: E: Background Anton is a Director in EY s Capital and Debt Advisory team He joined EY in 2011, coming from the Fitch Ratings EMEA Corporates team in London Background Francesco is an Associate Director in EY s Capital and Debt Advisory team He joined EY in 2013, coming from S&P Capital IQ Risk Solutions, Standard and Poor s Credit Risk Advisory department Mathieu Scemama Senior Executive T: M: E: mscemamadegialluly@uk.ey.com Background Mathieu is a Senior Executive in EY s Capital and Debt Advisory team He joined EY in July 2014, coming from Moody s Investors Service Credit Ratings Advisory 5

6 How we can help Indicative ratings assessment process Our aim in this process is to: Collect all the information required for a ratings process; Analyse this information with reference to agency rating methodologies and each agency s rated peer universe; Discuss key credit issues with relevant agency analysts to see where they stand; and Make a clear and detailed recommendation on which rating agency(ies) you should contract with, what the likely rating outcome will be, and what can be done to optimise the ratings outcome before launching a formal ratings process. Weeks Information gathering and analysis Including, for example: financial performance, business strategy, debt profile, liquidity, governance, ownership, capital structure, market context and competition, regulatory information, investment programme 2 Management interviews As required to supplement information provided Assessment of credit rating methodologies 3 Methodology review Identification of critical issues or areas of ambiguity that require clarification Identification of methodological differences that may influence the choice of rating agency 4 Informal rating agency meetings Meeting agencies on an informal basis (can be on a no names basis if needed) to clarify analytical approach, views on peers and on outstanding credit issues that could affect the rating outcome 5 Quantitative analysis Analyse historical financial statements and produce forecast financial statements/credit ratios, adjusted for agency methodologies and appropriate stresses and/or business plan scenarios, as appropriate 6 Peer analysis Preparation of comparative analysis against rated peer groups 7 Conclude and present findings Identification of key risks and ratings constraints, having reference to company information and agency methodologies and peers Recommendations on possible actions to improve ratings outcome Recommendation on which rating agencies should be engaged, having reference to likely rating outcome, stability of the ratings over time, costs and analyst quality and availability Credit Ratings Advisory 6

7 How we can help Indicative ratings execution process During this process we work closely with you to prepare for rating agency interviews, ensure we have collected all appropriate supporting information and presented it in the best possible light, provide supplemental analysis where appropriate, and remain in contact with rating agency analysts to support their internal process with additional information, challenging assumptions or conclusions as appropriate. Weeks Formally engage rating agencies Select and contract with agencies, negotiate fees and product types, negotiate pace of work as required 2 Preparation of agency submissions Complete first draft of rating agency presentations and supplementary material Review by management and finalisation of rating presentations Preparation of supporting information packs and analysis as appropriate 3 Management preparation Provide draft questions with key messages to highlight credit strengths and address weaknesses, supplemented by mock interviews if required 4 Rating agency meeting Management meetings with rating agency(ies) 5 Rating agency analytical process and follow-up Provide additional information and analysis to rating agencies as required 6 Ratings committee decision Communication of rating outcomes with verbal description of rationale Advise on whether to appeal any aspect of the decision or accept the outcome and convert to a public rating as appropriate 7 Ratings report Production of agency press releases: review for errors, misstatements, or the omission of material information Production of ratings report by agencies with similar review process 8 Investor/stake- holder Communication As required, prepare responses to investor or other stakeholder questions, draft or review press releases and other stakeholder material if required Credit Ratings Advisory 7

8 Sample credentials Ratings advisor to the UK Municipal Bond Agency on debut private ratings Ratings advisor to Universities Superannuation Scheme in respect of EUR2.8bn CLO investments Ratings advisor to Scottish Widows on internal rating of equity release mortgage-backed securitisation Ratings advisor to Wells Fargo Securities International on debut public ratings Ratings advisor on 494mn management buy-out Ratings advisor on structuring of an asset based financing Ratings advisor supporting valuation of infrastructure debt portfolio Ratings advisor to the UK government on financing of the 4bn Thames Tideway Tunnel Confidential Ratings advisor to a UK bank on divestiture of certain foreign investment banking operations Ratings advisor in respect of subsidiary operations Ratings advisor on debut public ratings Ratings advisor on debut private ratings Credit Ratings Advisory 8

9 EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization and may refer to one or more of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. Ernst & Young LLP The UK firm Ernst & Young LLP is a limited liability partnership registered in England and Wales with registered number OC and is a member firm of Ernst & Young Global Limited. Ernst & Young LLP, 1 More London Place, London, SE1 2AF Ernst & Young LLP. Published in the UK. All Rights Reserved. ED NONE (UK) Creative Services Group. In line with EY s commitment to minimise its impact on the environment, this document has been printed on paper with a high recycled content. Information in this publication is intended to provide only a general outline of the subjects covered. It should neither be regarded as comprehensive nor sufficient for making decisions, nor should it be used in place of professional advice. Ernst & Young LLP accepts no responsibility for any loss arising from any action taken or not taken by anyone using this material. ey.com/uk