Emerging Market Corporate Credit Workshop

FitchTraining
London, United Kingdom

Course Format: Classroom | E-learning | Virtual Class | Online | On-site | Blended | Self-paced

Course Description:

'' A four day workshop for credit risk and fixed income professionals offering a structured approach to the analysis of emerging market corporate credits. The seminar applies the frameworks and tools offered in the parallel workshops: Corporate Credit Analysis and Corporate Credit Fundamentals; but applies more focus on issues critical to emerging markets, such as: exposure to foreign currency fluctuations and high inflation, sovereign risk, financing fast expanding companies and the assessment of the role of shareholders and management.

Content
ANALYTIC OVERVIEW
Emerging market credit analysis
Compare and contrast the analytic techniques used to assess the credit standing of companies in emerging and developed markets
Techniques to help cope with lack of disclosure and transparency
Structured approach to analysis
A framework for credit assessment: purpose, payback, risks and structure
Purpose: identifying the borrower and use of funds; the challenges of lending to multiple borrowers within a group structure
Payback: linking credit assessment to primary and secondary sources of repayment
Risks to repayment: sector and company specific analysis to evaluate debt servicing ability
Structure: Setting terms and conditions of lending to meet the commercial needs of a company while protecting lenders�interest.
Market perspectives
Quantifying credit risk: Probability of default and loss given default; migration risk:
Rating agency approach to credit: an overview
Market indicators as early warning signals of refinancing risk
Macro and commodity indicators giving early signals of systemic risk
Credit ratings: company / sovereign rating trend and outlook
Debt market: company / sovereign bond spreads and CDS levels compared to relevant rating curves
Equity signals: share price movements and key multiples.
RISK I: MACRO CONSIDERATIONS
The operating environment
Understanding key drivers of sovereign risk
Sources and sustainability of growth: domestic and export drivers
Key macro vulnerabilities of emerging markets: FX, Government intervention, systemic risk, high inflation: impact of key variables on differing sectors
Distinguishing between markets in different stages of transition
Sector
A structured approach to understanding key drivers of sector performance: using the Porter model to anticipate cash flow drivers
Understanding the structure of an industry, the key players, and its growth dynamics
Sector profitability: assessing competitive forces that influence operating profits
Anticipating cash flow performance: key sector financial drivers of sales growth, operating profit margins, working capital requirements, and capital expenditure needs
Critical success factors and a company’s ability to sustain a competitive advantage
Using the understanding of the sector to create expectations about a company’s balance sheet and income statement performance
RISK II: BUSINESS RISK
Business strategy
Assessing a company’s strategy and position in the marketplace and the viability of its business model
Understanding the strategic direction of the firm and its impact on the credit standing of the company
Assessing the risks and rewards of diversification, vertical integration and growth.
Asset management and cash flow impact
Key ratio and cash flow indicators to evaluate asset efficiency and impact on cash flow
Uncovering and assessing key risks: understanding a company’s business cycle
Financing the business cycle: defining net working capital
Working capital challenges: availability, cost and quality of supplies, inventory management, relative power of buyers and suppliers, logistics / supply chain management and distribution challenges
Off-take agreements: finding the loopholes and risks in long term contracts
Overtrading �impact on cash flow of high growth and declining margins
Assessing capex needs: the challenges of measuring fixed asset efficiency
Use of peer analysis, sector specific ratios and industry bench-marks to assess performance.
Earnings dynamics and cash flow analysis
Key ratio and cash flow measures for evaluating sales, earnings, operating and free cash flow
Evaluating the quality of the income stream and the cash flow effect
Defining success: bench marking sales growth and profit margins
Accounting considerations: unravelling the cash flow impact of income from associates, minority interest, pension costs , derivatives (foreign exchange and interest rate management decisions)
Commodity price exposures on the supply and demand side
Identifying, quantifying and managing foreign exchange exposures
Forecasting and sensitising key cash flow variables: sales, profit margins, working capital and capex needs.
RISK III: FINANCIAL RISK
Financial strategy
Using business risk to gauge the appropriate level of financial risk
Matching the needs of the business with the term and currency of the debt.
Financial flexibility and liquidity
Determining financial flexibility: measuring liquidity: ratio and cash flow tools
Refinancing risk: evaluating payment readiness, debt repayment structure and contingency liquidity
Assessing the availability of committed lines of credit.
Solvency and debt service capability
Key ratio and cash flow benchmarks for evaluating solvency and debt servicing ability
Defining, measuring and evaluating solvency using ratios and the cash flow statement
Assessing the control of the cash flow when the company has significant MI shareholders
Using cash flow forecasts to assess debt service capability
Assessing debt capacity based on present value of cash flow available for debt service.
RISK IV: MANAGEMENT AND OWNERSHIP
Ownership
Complex group structures:

Tracing ownership and influence
Related party transactions: identifying risks to lenders
Multiple listed businesses and ownership structures controlled and dominated by a powerful shareholder.
Government as a dominant shareholder:

Scope for authorities to influence decisions that adversely affect lenders
Comfort to lenders or a source of risk?
Corporate governance:

Benchmarks for corporate governance in listed and family companies
Early signals of lack of integrity, fraud / serious misdemeanours
Lack of transparency
Wealthy family groups that have political influence / control over major industries.
Management
Management competence: what are we looking for, how is it measured?
Assessing management in emerging market companies:

Depth and level of experience
Succession, nepotism and other challenges for family owned companies
Civil servants as senior position in strategically important industries
Succession issues
Corporate aims and goals: their effect on the company’s future creditworthiness.

STRUCTURE
Assessing the structure of the transaction - debt, ranking, safeguards and pricing
Debt profile - assessing the appropriateness of the structure in terms of amount, currency and maturity
Ranking - understanding different ways subordination can be achieved
Safeguards - the use of covenants and other techniques to mitigate risk
Credit pricing: benchmarking and evaluating the risk ~ return profile of the transaction.
CLOSE AND RECAP
...''

Phone:+ 44 (0) 20 7201 2770

School Address:

28 Headfort Place, London, SW1X 7DH, United Kingdom.


Jobs & Resumes: London
Houses & Roommates: London
Travel Agencies: London

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