Nordic Credit Rating (NCR) today published its finalised methodology for investment holding companies, defining NCR's approach to analysing business and financial risks in investment holding companies and determining issuer ratings.
Methodology summary
The finalised Investment Holding Company Methodology:
- defines our approach to rating investment holding companies, including investment holding companies with up to 50% total portfolio value in operating entities;
- defines our approach to business risk and financial risk factors included in our indicative credit assessment;
- defines the weighting and guidelines for scoring business risk factors for investment strategy, asset diversity and portfolio liquidity;
- defines the weighting and guidelines for scoring financial risk factors associated with key ratios, risk appetite and financial flexibility; and
- defines adjustment factors leading to additional notching to capture features in excess of those reflected in our indicative credit assessment, such as excessive concentration, high-risk investment appetite, dividend control and diversity, low liquidity and other factors.
Changes following the request for comments
NCR did not receive any official comments on its proposal, but we have made some refinements. The final criteria differ slightly from the published proposal in that they:
- clarify that corporate and non-financial holding companies, as defined in our Group and Government Methodology, are outside the scope of these criteria (ยง2).
Impact on published ratings
The methodology increases the scope of potential ratings and does not affect any published ratings.
The full criteria documents are available at:
https://nordiccreditrating.com/governance/methodologies.
This commentary does not constitute a rating action.
Contacts:
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com
Gustav Nilsson, analyst, +46735420446, gustav.nilsson@nordiccreditrating.com