Economics and Business Risk Information

Risk Information Rating is an interactive process relying primarily in gathering information from the issuer and supplementing it with strategic information obtained from outside independent sources. The entire process Is aimed at evaluating (a) Financial Risk and (b) Business Risk Information with regard to (a) Is generally provided by the company requesting for rating and, only when necessary, such Information Is corroborated or complemented by Information from other sources.However, comprehensive information with regard to (b) is not readily available from any identifiable source. PACRA has, therefore, proceeded to develop its own database consisting of economic data by industrial sub-sectors. Additionally, it continuously monitors macroeconomic developments and important government policy changes (like fiscal adjustments) for determining their likely impact on specific sectors and companies. PACRA does not assign unsolicited ratings.This policy is based on our sensitivity egardin g the motivation for such a practice: globally, unsolicited ratings have come under criticism as they seem to be a means of pressurizing recalcitrant entitles to subject themselves to rating. Again, the value of credit rating flows from the Interactive nature of the exercise. Thus, unless the rated entity has an opportunity to share the reasons for any delinquent performance In the past and Its view on prospects, the rating opinion may not be reliable. The rating process begins with a careful review of an entitys published information.From this review, analysts (normally two, the lead and support analyst, are assigned to each rating assignment) determine what additional data are needed and a detailed questionnaire is sent to the client. An initial rating assessment is made and discussed internally. A discussion agenda is then prepared for a meeting with the client company's senior management. The meeting Is wide-ranging, covering the company's flnanclal position, earning trends, ope rating practices, competitive standing, future prospects, the economic environment and many other Issues that an have a bearing on PACRA's assessment.In order to ensure full understanding of their position, companies entrust PACRA with confidential information, which is not disclosed in rating reports but which is certainly taken into account when assigning the ratings. In determining the initial ratings for an institution, a rating proposal is prepared based on the information gathered at the Management Meeting with the company, and is presented to the rating committee (comprising the Chairman, ManagingDirector, senior executives and the lead analyst). A draft rating report is then prepared and sent to the client for verification of the accuracy and confidentiality of the Information In the report. upon the client's approval, the one-page summary of the report Is made public and a press release of the assigned rating Is Issued. The detailed rating report Is sent to the client. plac ed on ‘RatingWatch'. The rating is then upgraded, downgraded or maintained after assessing the impact of any such change.