Type of assessed credit risk

Ratings issued by EuroRating constitute synthetic credit risk assessments concerning individual rated entities. This risk is defined by EuroRating in terms of absolute categories – the level of ratings for individual entities do not depend on ratings of other entities. Therefore, ratings issued by EuroRating are not comparative rankings but are assessments assigned to the constant scale of risk.

Ratings issued by EuroRating concern financial liabilities (e.g. credits or bonds) of rated entities, and constitute the total estimated risk of loss (i.e. ultimate loss of entire or part of a receivable along with interest) by financial creditors of the rated entity as a result of its default. Therefore, ratings issued by EuroRating represent the combination of a probability of default (PD) of the analysed entity and the estimated level of the ultimate loss of receivables by its creditors in case of actual occurrence of default (Loss Given Default - LGD).

Ratings issued by EuroRating are long-term ratings – they define the financial reliability and the credit risk of the rated entity within a perspective of up to three subsequent years (i.e. up to 36 subsequent months).

Unless clearly indicated in an additional description, ratings issued by EuroRating constitute general ratings for the issuer (relate to all unsecured and unsubordinated financial liabilities). Any other ratings issued for the same entity may concern its liabilities characterized by a different profile of risk for creditors (e.g. in case of issue of secured or subordinated bonds). Such ratings have additional designations indicating the types of liabilities covered by such ratings.