This update provides more transparency on default situations that can lead to a default classification for issuer and debt ratings. In addition we also provide more transparency on the mapping of long and short-term ratings.

Default definition

Scope Ratings has today updated in its definition applicable to a default related to a distressed debt exchange, debt restructuring or debt swap. The latter events are considered a default if the two following conditions are met: i) the event led to less favourable terms or a loss of value compared to the original terms of the debt, including unilateral or coercive currency redenomination; and ii) the event had the effect of avoiding a likely default. See section 3.4.1 of Scope’s Credit Rating Definitions.

Scope has further clarified that debt instruments in default with high recovery expectations or temporary payment disruption can be rated above D but at the lower end of the rating scale and generally not higher than B-. These will be identified as being in a default status on Scope’s website and in Scope’s default studies. See section 3.4.3 of Scope’s Credit Rating Definitions.

Short-term ratings

Scope’s long-term vs short-term correspondence table (see section 3.3 of Scope’s Credit Rating Definitions) has been amended to extend the S-4 short-term rating down to the C rating. Additionally, the D rating category has been added to the short-term rating scale.

Ratings

This rating definitions update does impact any outstanding credit ratings.

Scope’s Credit Rating Definitions are available here.

Conditions of use / exclusion of liability
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