MARC has today published an updated version of the methodology it uses to assign ratings to non-financial corporates. The report supersedes and replaces the existing "Corporate Debt Rating Methodology", dated April 2015. The agency does not anticipate any rating changes from the implementation of this methodology update.

MARC is of the view that the updated methodology will more clearly differentiate the rating approach to non-financial corporates from that of corporates and corporate groups whose principal activities are to provide financial services. As implied by the title of this rating methodology, its scope extends to counterparty and related party credit risk assessments of non-financial corporate entities and is not limited to corporate debt issuances only. The methodology incorporates a supplementary methodology “Corporate Credit: Rating Outcomes Grid” that was published earlier in October 2014 which will be retired after the publication of this methodology update.

MARC’s updated non-financial corporates rating methodology contains references to other related rating methodology including amongst others, the “Equity Credit and Notching Approach for Corporate Subordinated Debt and Hybrid Securities” and “Rating Approach for Issuances Supported by Third-Party Credit Guarantees” criteria. The rating agency has also laid out in greater detail the key quantitative metrics and qualitative factors it incorporates into its financial risk analysis. Finally, the relationship between long-term and short-term ratings is now explained in the methodology.

The updated methodology follows MARC’s recently completed periodic methodology review and is immediately effective upon publication. There is no impact on existing ratings of non-financial corporates as a result of these changes. The updated rating methodology can be accessed on MARC’s website at Non-Financial Corporates.

Contact:
Milly Leong, +603-2082 2288/ milly@marc.com.my.