Fee Based Rating
KBRA charges a fee to rate new issuers of primary securities (newly issued) and secondary securities (previously issued) for:
- Collateralized Debt Obligations (CDO’s)
- Commercial Loan Obligations (CLO’s) - currently in development
- Municipal Bonds— currently in development
The New Issue Rating and Secondary Ratings are Kroll Bond Ratings's opinion regarding an issuer's certainty to repay its individual financial obligations. The rating includes the possibility of default on debt payments as well as the probability of overall failure since these are closely related. The two types of New Issue Ratings, Investment Quality and Speculative Quality are defined as follows.
Investment Quality
- AAA New Issue Ratings for companies having an exceptionally strong financial condition with the highest capacity to meet timely debt payments and other financial commitments. This is the highest level of credit quality.
- AANew Issue Ratings for companies with a very strong financial condition and the ability to meet credit obligations on a timely basis. Adverse changes in economic and financial conditions are not likely to affect its ability to meet obligations.
- ANew Issue Ratings for companies having a strong financial condition and strong capacity to meet its debt and credit obligations but are likely to be more vulnerable to adverse conditions in financial markets, economic and business conditions.
- BBB New Issue Ratings for companies where the financial condition of the institution is adequate to meet current credit obligations but its ability to meet future obligations could be susceptible to adverse changes in economic, financial and business conditions.
Speculative Quality
- BBNew Issue Ratings for companies that can meet current obligations but are more vulnerable than BBB rated companies in meeting their credit obligations because of adverse economic, financial or business conditions.
- BNew Issue Ratings for companies judged to have a relatively weak financial condition and the ability to meet credit obligations are likely to be affected by adverse changes in economic, financial or business conditions.
- CCCNew Issue Ratings for companies with a weak financial condition and not likely able to meet their credit obligations in an environment where significant adverse economic, financial or business conditions exist.
- CC or CNew Issue Ratings for institutions that are highly susceptible to nonpayment of their debt obligations, these institutions may be in or approaching bankruptcy.