Due to their impact on funding costs, internal and external credit ratings are a key element for the pricing of credit products. They also determine the overall profitability of a banking relationship.
It is difficult for treasurers to evaluate how banks view companies on the bank’s internal credit ratings scale.
Only a thorough and independent evaluation will yield a precise result and numerous parameters need to be taken into account.
How Redbridge can help you?
Redbridge’s Debt Advisory team provides access to an exclusive bank credit scoring methodology. In addition, Redbridge has developed a proprietary risk-based model (RAROC) to analyze fees paid by its clients to their banking partners and to determine each lender’s expected level of return.
From a CFO perspective, having a clear view on internal credit ratings is key to:
- holding appropriate dialogs with the lenders
- ultimately, to negotiating optimal terms and conditions