Credit Analysis for Corporate Issuers Flashcards
What is “first mortgage debt”?
debt secured by pledge of a specific property.
What is “first lien debt”?
Debt secured by a pledge of certain assets that could include buildings, but it may also include property and equipment, licenses, patents, brands, etc.
What is “Priority of Claims”?
Priority of payment, with the most senior or highest-ranking debt having the first claim on the cash flows and assets of the issuer.
What is “Senior Unsecured Debt”?
The highest-ranked debt in an issuer’s capital structure which is a general obligation of the borrower.
What is an “Issuer rating”?
A rating which seeks to capture the credit risk of a specific financial obligation of an issuer which takes such factors as seniority into account.
What is an “Issue Rating”?
A rating which seeks to capture the probability of default or expected loss of the issuer’s senior unsecured bonds.
What is “notching”?
A ratings adjustment methodology where specific issues from the same borrower may be assigned different credit ratings.
What is “Structural Subordination”?
Arises in a holding company structure when the debt of operating subsidiaries is serviced by the cash flow and assets of the subsidiaries before funds can be passed to the holding company to service debt at that level.
