Risk Commentary
The markets have been and remain volatile such that opportunities arose for locking in a competitive funding rate. HBS-trained Denise Peters (name changed to protect the innocent), CFO, Treasurer, and manager of the firm’s bottom line, had wanted to raise a slug of capital to replace some high-priced, covenant heavy debt which was a constant headache for her over-worked (and under-paid) treasury department. Earlier in the year Ms. Peters tasked her eager-beaver assistant treasurer with watching the market for a window to tap the market. At two in the afternoon, her treasurer said the conditions appeared right whereupon the Ms. Peters arranged a call with her go-to investment bankers who was in regular touch with major private debt funds. As expected, the suspender-wearing wall street sharpie confirmed what Ms. Peters already knew: conditions were terrific for hitting the market. However, then the bankers threw are curveball even the hyper-prepared Ms. Peters had not anticipated; while her timing was right, her line-up was wrong. To hit the market, she needed to access investors which needed an NRSRO rating and the best her team could do was a four-to-five-week turnaround and even that was pushing it. After slamming down the phone with her good for nothing bankers she was determined to fix this problem pronto.
Two weeks later … Our diligent CFO, Denise Peters was dead set on fixing the aforementioned problems, did so by fixing the impediment, and was able to tap the markets at advantageous terms.
Nota Bene: While the tone of this article is jocular, the conditions mentioned are real and instructive.
Egan-Jones Ratings specializes in all types of private placements
How we can help
Prospective clients have often asked how we can help them and what areas we consider are particularly
strong. In response, below are the areas worth reviewing:
Private Placement Ratings – assisting investors access private markets via ratings on private placements.
Subscription Ratings – we have had a strong track record in providing early, accurate independent credit
rating research.
Climate Change / ESG Scores – an assessment of entities’ current and prospective scores.
Independent Proxy Research and Recommendation/Voting – assisting fiduciaries in fulfilling their voting and record-keeping obligations.
This content is produced by individuals who are not part of the credit ratings team and do not have responsibilities for determining credit ratings or developing/approving methodologies, models or procedures that are used to determine credit ratings. The views expressed herein might not parallel the views of the credit ratings team. The information in this report is based on current publicly available information that Egan-Jones Ratings Company (“EGAN-JONES”) considers reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The information, opinions, estimates, and forecasts contained herein are as of the date hereof and are subject to change without prior notification. Any credit ratings issued by EGAN-JONES represent EGAN-JONES’ current opinion of the credit risk of the instrument or entity rated. Any such credit ratings do not address other factors or risks such as market volatility, market risk or liquidity risk. Prospective clients should refer to EGAN-JONES’ published statements as to the meaning of different credit ratings assigned by EGAN-JONES. Credit ratings provided by EGAN-JONES are solely intended to be used by institutional investors. EGAN-JONES does not assess or address the suitability of any investment for any client or any other person or the marketability of any security or instrument. Any credit rating issued by EGAN-JONES is not, and should not be construed as, a recommendation to buy, sell or hold any security or instrument or undertake any investment strategy and EGAN-JONES does not act a fiduciary for any person. EGAN-JONES may raise, lower, suspend, withdraw, or otherwise modify a credit rating at any time in its sole discretion. EGAN-JONES IS NOT LICENSED AS A NATIONALLY-RECOGNIZED STATISTICAL RATING ORGANIZATION (“NRSRO”) IN RESPECT OF “ASSET-BACKED SECURITIES”, “GOVERNMENT SECURITIES”, “MUNICIPAL SECURITIES” OR SECURITIES ISSED BY A FOREIGN GOVERNMENT (ALL AS DEFINED IN THE FEDERAL SECURITIES LAWS AND, COLLECTIVELY, THE “EXCLUDED SECURITIES CATEGORIES”) AND ANY RATING ISSUED BY EGAN-JONES IN RESPECT OF ANY SECURITIES FALLING WITHIN AN EXCLUDED SECURITIES CATEGORY IS NOT ISSUED BY EGAN-JONES IN ITS CAPACITY AS AN NRSRO. EGAN-JONES is not responsible for the content or operation of third-party websites accessed through hypertext or other computer links, cannot guarantee the accuracy of any information provided on an external website and shall have no liability to any person or entity for the use of, or the accuracy, legality, or content of, such third-party websites. The views attributed to any third party, including any article accessed via computer links, do not necessarily reflect those of, and are not an official view or endorsement of, EGAN-JONES. This publication may not be reproduced, retransmitted, or distributed in any form without the prior written consent of EGAN-JONES. © 2022, Egan-Jones Ratings Company. All rights reserved.
