Shadow Rating. Shadow rating is an approach to determine the rating of the bond issuing company for a private placement. The rating is determined by considering financial ratios of the issuing company based on available financials. The ratios can be broadly classified into three categories as shown below. It is a good practice to use at least one ratio from each of the three categories while determining the credit rating of the investment. • Liquidity coverage • Profitability • Leverage ratios As per an article on “Updated Summary Guidance for Notching Bonds, Preferred Stocks and Hybrid Securities of Corporate Issuers” published in February 2007 by Xxxxx’x Investor Service (Global Credit Research) [2], the corporate credit rating obtained using the shadow rating approach would be equivalent to the credit rating of senior unsecured debt issued by the entity. For the securities senior/junior to the senior unsecured debt the security rating can be obtained by notching up/down the security rating of senior unsecured debt.
Shadow Rating. Each of the Seller and the Servicer shall take such actions as reasonably requested by the Agent and as otherwise are necessary to obtain a "shadow" rating for the financing facility provided hereunder of at least "A2" by Moody's and a credit assessment letter from S&P stating that the credxx xxxxormance of the financing facility provided hereunder is consistent with that of at least a "A" rated obligation (collectively, the "Minimum Shadow Rating") within 60 days after the Closing Date (including, without limitation, modifying the calculation of Advance Rate and Excess Concentration Amount and agreeing to amendments to the Transaction Documents (including, without limitation, amendments of provisions with respect to Eligible Receivables criteria) to the extent necessary to obtain such a Minimum Shadow Rating).
