1. Definition of Corporate Credit Assessment
Overall credit assessment of a target corporation's management circumstances, ability
to pay its obligations,
and etc.
2. Definition of Default
① Unlikely to pay criterion : In case where it is considered that a corporation is unlikely
to pay its credit obligations to the lender in full, without recourse by the lender to
actions such as realizing security.
ㆍCorporations in which a negative credit-affecting event such as bad debt expense
has occurred.
ㆍLegally bankrupt corporations (filed for bankruptcy, account transactions currently suspended), and corporations subject to liquidation (court receivership, insolvency postponement agreement and composition, and work-out)
ㆍCorporations in which restructuring of the credit obligations has occurred due to credit deterioration.
ㆍNon-performing loans
② Past due criterion : The corporation is past due more than 90 days on any credit
obligation to the lender.
3. Definition of Issuer Rating
- Issuer Rating is opinions of the ability of entities to honor financial obligations.
There are twenty two different rating grades ranging from AAA to D.
Grade
Definition of Each Grade
AAA
Extremely High quality, reliable and stable with minimal credit risk
AA
Very High quality, Slightly less reliable than AAA
A
High quality, but somewhat likely to be affected by adverse economic
conditions and change of circumstances than the obligors with? higher
grades
BBB
Upper-medium quality, but more likely to be affected by adverse
economic conditions and change of circumstances
BB
Medium quality, but very likely to be affected by adverse economic
conditions and change of circumstances
B
Lower-medium quality, adverse business conditions and change of
circumstances will lead to insufficient ability to meet financial
obligations
CCC
Weak quality, Speculative, and somewhat unlikely to meet its financial
obligations
CC
Very Weak quality, more unlikely to meet its financial obligations
C
Extremely Weak quality, very unlikely to meet its financial obligations
D
Currently defaulted on financial obligations
NR
Not Rated due to refusal of investigation, withdrawal, and etc.
※ "+" and "-" modifiers are given to ratings within a range from AA to CCC in
order to indicate their
relative standings within each category.
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