Rating is PEFINDO’s main activities. PEFINDO provides two basic types of ratings: Company Rating and Debt Instrument Rating.
Company rating, also called General Obligation (GO) Rating or Issuer Rating, is an assessment of the overall credit worthiness of a company to fulfill all of its financial obligations. Company ratings cannot be automatically applicable to specific debt securities, as they do not take into account the nature and provisions of the debt security, its standing in bankruptcy proceedings or liquidation, statutory preferences, or the legality and enforceability of the debt security itself. In addition, Company or Issuer Ratings do not take into account the creditworthiness of the guarantors, insurers, or other forms of credit enhancement supporting the company’s credit quality.
This type of rating can be used by Company or Issuer to provide a visible grading measure of creditworthiness relative to others. Furthermore, Company or Issuer Ratings can be used as a marketing tool to promote corporate standing.
Debt instrument rating, is a current opinion of the creditworthiness of an obligor with respect to a specific financial obligation, a specific class of financial obligations, or a specific financial program. It takes into consideration the creditworthiness of guarantors, insurers, or other forms of credit enhancement on the obligation. The opinion evaluates the obligor’s capacity and willingness to meet its financial commitments as they come due.
This type of rating may assist the issuer in determining the structure of debt issuance (coupon rate, tenor, credit enhancement). On the other side, debt instrument rating is useful for investors to compare different issuers and debt issues when making investment decisions and managing their portfolios.