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Credit Rating Principles

CCXAP holds fast its credit rating principles of independence, integrity, creditability and fairness which are materialized in its micro, macro, dynamic and static analyses.

 

Micro-analysis and Macro-analysis 

The core of micro-analysis is the measurement of the creditworthiness of a corporation or a corporate issue that requires an in-depth evaluation of the rated entity’s intrinsic financial capacity. However, such evaluation does not take into account the level of external protection that may be available from its holding company or from any external guarantor or credit enhancement collaterals. Macro-analysis focuses on macroeconomics, such as, market demand, industry characteristics and growth prospects, effects of industry policies and a corporation's ability to minimize risks. It also measures the level of protection from external support available to the rated entity and its debt issue. Strong external support can compensate for financial weakness to a certain extent.

 

Dynamic Analysis and Static Analysis 

Dynamic analysis focuses on the ability of a rated entity to repay debt on time.  It is important to monitor changes in the creditworthiness and the possibility default of a rated entity during the credit analysis process.  In predicting future business prospects and financial conditions, it is necessary to look at the rated entity’s business performance track record and the characteristics of the industry cycle that may impact on the rated entity’s future financial position. CCXAP also notes and follows news that may affect the credit worthiness and repayment ability of the rated entity. Static analysis focuses on historical data analysis, which has an interactive relationship with and also informs the carrying out of dynamic analysis.