Euler Hermes Rating Invites Market Participants to Comment on Proposed SME Rating Methodology
HAMBURG, Germany, February 14, 2017 /PRNewswire/ --
Euler Hermes Rating is requesting comment from market participants on its proposed methodology for rating non-financial Small and Medium Enterprises and Mid-Caps (SMEs) in Germany. For SMEs, the proposed methodology will replace the Issuer Rating Methodology currently in use to rate corporate debt issuers.
In the proposed methodology, Euler Hermes Rating introduces a scorecard that describes the analytical considerations for rating SMEs. The scorecard clearly outlines the weights assigned to those analytical considerations and provides guidance on how Euler Hermes Rating will score the various elements. Euler Hermes Rating also describes how factor scores will map to the scorecard outcome.
Euler Hermes Rating expects that the methodology, if implemented as proposed, will result in few changes to SMEs' issuer-level ratings. Upon publication of the final SME Rating Methodology, Euler Hermes Rating will review all ratings assigned to this group of corporates and, where relevant, will notify market participants of any resulting rating actions.
This methodology is based on the analysis of the German SME market and a comprehensive experience of assessing the risk of SMEs in Germany. Quantitative elements of this methodology are built on data and statistics of approximately 37,000 companies with financials over the 2002-16 period and revenues typically between €10 million and €500 million.
Key elements:
- The analysis includes a dedicated scorecard for non-financial SMEs in Germany.
- The scorecard consists of three fundamental factors (sector profile, business profile, financial profile) and four notching adjustments (liquidity, debt structure, strategic and operational management, governance and financial policy).
- Other rating considerations are taken into account for the final rating, such as legal structure and external influence, reporting and transparency, event risk and limiting factors.
Feedback
The proposed SME Rating Methodology is available at http://www.ehrg.de/request-for-comments.
As part of a continuing and open dialogue with issuers, investors and other interested parties, we invite market participants to comment on this methodology by March 14th, 2017 by submitting their comments to rfc@eulerhermes-rating.com.
This proposed methodology was developed with Moody's Investors Service (MIS) as part of its previously announced collaboration with Euler Hermes to provide credit ratings for small- and medium-sized enterprises (SMEs) across Europe.
About Euler Hermes Rating
Euler Hermes Rating GmbH (Euler Hermes Rating) was founded in 2001 as an independent European rating agency of the Euler Hermes and Allianz Group focusing on issuer and issue ratings. Euler Hermes Rating is registered as a credit rating agency (CRA) in accordance with Regulation (EC) No 1060/2009 of the European Parliament and Council (as amended) and is considered as an external credit assessment institution (ECAI) by the European Banking Authority (EBA). Euler Hermes Rating is a subsidiary of Euler Hermes (ELE:PA), the world leader in trade credit insurance.
Press/Euler Hermes Rating GmbH:
Ralf Garrn - ralf.garrn@eulerhermes-rating.com
Friedensallee 254
22763 Hamburg
Tel.: +49-40-8834-640
Fax: +49-040-8834-6413
http://www.eulerhermes-rating.com
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