Rating Agencies Focus On High-Yield Liquidity Risk

Rating agencies are expanding their high-yield short-term rating efforts in an attempt to meet the needs of investors, who are increasingly separating liquidity risk from the total package.

  • 21 May 2004
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Rating agencies are expanding their high-yield short-term rating efforts in an attempt to meet the needs of investors, who are increasingly separating liquidity risk from the total package. Moody's Investors Service is applying its speculative-grade ratings scale to first time issuers and Standard & Poor's is piloting a liquidity report card, which looks at cash flow analytics and projections as well as a potential expansion of its short-term rating scale to provide greater differentiation of credit worthiness.

Moody's expects to assign speculative-grade ratings, which look more specifically at liquidity and free cash flow in the short-term, to as many as 250 companies by the end of the year, or about double the current level. Michael Rowan, group managing director, corporate finance, said the ratings are more aligned with the way investors now evaluate high-yield companies, with an increased focus on free cash flow rather than debt-to-EBITDA.

While the market environment is more accommodating today than it was a couple years ago, liquidity risks still remain, noted Cliff Griep, chief credit officer at S&P, signaling the need for more analysis on liquidity as a short-term risk factor.

Some investors noted the agencies are addressing bear market issues from the past. One high-yield manager added more detailed short-term analysis could be pertinent in the future, depending on the direction of interest rates and market conditions.

  • 21 May 2004

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 280,265.07 1033 8.97%
2 JPMorgan 255,894.98 1165 8.19%
3 Bank of America Merrill Lynch 248,918.80 861 7.97%
4 Goldman Sachs 192,023.30 615 6.15%
5 Barclays 183,846.60 703 5.89%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 HSBC 28,458.91 116 7.05%
2 Deutsche Bank 26,902.99 90 6.67%
3 Bank of America Merrill Lynch 24,997.04 70 6.19%
4 BNP Paribas 21,217.62 120 5.26%
5 Credit Agricole CIB 19,454.23 112 4.82%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 13,671.74 61 7.87%
2 Citi 12,076.06 76 6.95%
3 Morgan Stanley 11,899.85 66 6.85%
4 UBS 11,800.30 47 6.80%
5 Goldman Sachs 11,111.93 58 6.40%