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ARCHIVE | Criteria | Financial Institutions | General: Captive Finance Operations Sep 06
Standard & Poors, Sep 2006
Abstract
A captive finance operation (captive) functions primarily as an extension of a corporate's marketing activities. The captive facilitates the sale of goods or services by providing debt and/or lease financing to the corporate's dealer organization (wholesale financing) or end customers (retail financing). The captive may also provide ancillary services, such as selling insurance. The captive can be structured as a legally separate subsidiary of the corporate, or as a distinct operating division or business line. The importance of having a captive finance function varies considerably across industry sectors. In some sectors (e.g., automotive, agricultural and construction equipment), virtually every major participant offers finance support, and it would likely be a considerable competitive disadvantage for a company not to do so....
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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