The proposed updated methodology can be downloaded here.

The proposed update provides increased transparency and a detailed presentation of Scope’s analytical approach for assigning credit ratings to non-financial corporates. The proposed update of the methodology does not entail any changes to the essence of our analytical framework.  The methodology continues to be based on a modular rating approach for issuer ratings comprising an assessment of key rating factors that define a rated entity’s business and financial risk profiles which is supplemented by supplementary rating drivers. The rating approach on long-term debt ratings remains based on a generic notching approach for investment-grade rated issuers and a recovery analysis reflecting the value of claims at default against expected debt positions at default. The rating approach on short-term debt ratings remains based on the underlying issuer rating and its outlook as well as Scope’s assessment on the rated entity’s liquidity position.

The updated methodology will have no impact on existing ratings.

Summary of the proposed key changes

The proposed methodology includes the following adjustments to increase the transparency of the rating process:

• Clarification about the geographical scope of application

• Provision of additional transparency regarding the weighing of business and financial risk for non-investment grade rated issuers

• Provision of higher granularity regarding the computation and typical adjustments of Scope-adjusted debt

• Clarification of our rating approach for the debt of unrated issuers which is explicitly guaranteed by other rated issuers

• Additional elaboration on the integration of rating-relevant ESG factors which we consider in our analysis and which, if material, could impact our assessment of an issuer’s credit quality

• Provision of examples of our recovery analysis for the rating of long-term debt instruments/categories

• Additional editorial changes / clarification of wording

Call for comments

Scope invites issuers, investors and other interested parties to comment on the methodology by 1 July 2022, as part of the agency’s ongoing commitment to transparency and open dialogue with market participants.

Please send your comments to consultation@scoperatings.com.

Scope will review and publish the content of any written response in accordance with regulatory requirements unless the respondent has specifically requested confidentiality.