Benefits for corporate bond issuers of having a credit rating

Obtaining an independent and objective credit risk assessment in the form of a credit rating brings numerous significant benefits to issuers of corporate bonds:

  • by submitting to an assignment of an independent credit rating, issuers of bonds build an image of a transparent, credible and reliable company, therefore they can be positively distinguished on the capital market and more easily place their bond issues;

  • an external professional credit risk assessment allows expanding the group of potential buyers of issued debt securities to entities, which are not able to conduct credit risk analyses in their own scope and only purchase securities of companies with a credit rating assigned by an independent credit rating agency; in effect, this may be helpful for the company in placing the issue on the market and to lower costs of financing;

  • issuers, which have been less known on the capital market to date, thanks to obtaining a credit rating and its publication by EuroRating in the media and other information distribution channels have a chance to significantly increase the company's recognisability among investors, which may be very helpful in placing the bonds issue on the market;

  • credit ratings assigned by EuroRating (formally registered in the EU, subject to the ESMA's supervision, having the ECAI status) may be applied for regulatory purposes by all financial institutions in the entire European Union, which may increase the institutional investors' demand for bonds of issuers with a credit rating (both national and foreign investors);

  • a detailed credit risk analysis (using the 20-grade scale) allows investors, who are interested in purchasing the issued debt securities, to estimate the required risk premium, which positively affects the demand for the company's debt securities, thus contributing to a decrease of the final costs of financing;

  • a credit rating allows investors to make quick and effective decisions without incurring excessive expenditures for analysing and monitoring the issuer's credit risk; this, in turn, increases their interest in debt securities offered by companies with an assigned credit rating;

  • all investors obtain an easy access, free of charge, to the current rating data and to rating reports, which describe in detail the situation of the company in the context of its financial credibility;

  • quarterly rating verifications carried out by EuroRating as well as continuous monitoring of the credit risk of the analysed entity increase the safety of investing in the issuer's bonds on the secondary market, which contributes to an increased demand and higher liquidity of bonds trading;

  • obtaining a credit rating substantially increases the interest in the issuer's bonds among individual investors, which contributes to an increase of the demand for the offered debt securities and allows to substantially diversify the group of the company's bondholders, and this additionally improves the liquidity in trading bonds on the secondary market;

  • a credit rating may also bring benefits to a company, which has already executed a bonds issue; thanks to the assigned rating, the company may start building a history of financial reliability, as a result of which in the future the issuer will be able to more easily roll maturing bonds or, if needed, quickly execute a new bonds issue;

  • credit ratings assigned by EuroRating are cost-effective even for enterprises performing minor bonds issues; the rating costs may be recovered in multiple in the form of a lower risk premium on bonds, which may be required by investors who purchase bonds in connection with the larger transparency of the issuer and continuous monitoring of its credit risk by an independent credit rating agency.

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