Fitch Ratings has released tools designed to help investors better understand Fitch’s analytical approach, in particular the agency’s approach to computing credit metrics in IFRS jurisdictions, and its bespoke recovery analysis.
“These new tools are a continuation of EMEA Corporates’ Clear Thinking programme, which is designed to make Fitch’s ratings more transparent and useful to investors, issuers and their advisors,” says Alex Griffiths, Head of International Research in Fitch’s EMEA Corporate Group. “They complement the agency’s existing criteria, its Sector Credit Factors rating guidelines, and detailed issuer-level reports.”
The EMEA and Asia-Pacific Corporate Ratio Calculation tool allows users to calculate Fitch’s ratios. Along with clearer presentation of financial ratios, and the introduction of reconciliations of Fitch’s metrics to issuers’ published results in the new full rating report format, this gives more clarity than ever before.
The recovery ratings tool is based on the spreadsheet used by Fitch to perform bespoke recovery analysis. It leads the user through estimating enterprise value on default, and how this is apportioned between different classes of creditor to determine likely recoveries, and ultimately the notching of Fitch’s instrument ratings from the Issuer Default Rating.
Both tools can be found on Fitch’s main website or via Fitch’s Clear Thinking website, which also features an instructional video on Fitch’s approach to recovery ratings, a guide to Fitch’s corporate criteria, and a full listing of Fitch’s sector credit factors reports. The Clear Thinking site can be accessed here.