Canada saw a boom in debt deals in 2012, with domestic new issues jumping 15 percent to C$90 billion. The largest increase was in the Canadian domestic high-yield sector, which leapt nearly 40 percent year-over-year for a total of C$6 billion. The high-yield sector in Canada is becoming a viable alternative to the U.S. sector, which for years was the only avenue for Canada’s non-investment grade companies.
This trend has been a major topic of discussion roundtables for the Society of Canadian Treasurers (SCT). Practitioners have many questions about how to approach rating agencies for the first time. Recognizing their concerns, the SCT spoke with international and Canadian banks’ rating agency specialists, the three major rating agencies, and of course SCT members. The result was a new SCT Guide that focuses on best practices on how to approach and manage credit rating agency relationships.
In the new guide, author Nilly Essaides, AFP's Director of Practitioner Content Development, delves into the initial questions that treasurers ask when considering a rating, and provides insights from rating agency experts, analysts and treasurers. “You’re getting a rating that establishes your long-term funding profile, and once issued they tend to be sticky so it’s important to maximize the outcome on the first time,” advised Jamie Wetmore, Director of Debt Capital Markets, Oil and Gas at RBC.
The guide also provides best practices for treasurers when presenting to rating agencies, as well as advice on the post-meeting outcome and how to handle the relationship going forward. Rating agency executives, bankers and practitioners provided a comprehensive checklist for companies to follow in their presentations. Corporates must:
- Get the right people in the room
- Provide realistic projections and
- Acknowledge challenges.
SCT members are also provided three case studies in the guide:
- A non-investment grade company that sought a rating for the first time
- A company that was looking for a rating for a particular structured deal
- A company that maintains a rating even without having debt.
Download the new SCT Guide, Best Practices in Managing the Rating Agency Relationship, here. Nilly Essaides, author of the guide, will also be moderating a session on credit rating agencies this week at the AFP of Canada Treasury Management Forum.