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ARCHIVE | Criteria | Structured Finance | General: RATING SWAP-INDEPENDENT SYNTHETIC SECURITIES Jul 96
Standard & Poors, July 1996
Abstract
Standard & Poor's follows two general approaches to rating synthetic securities: the swap-dependent approach, and the swap-independent approach. The swap-dependent approach is the more traditional. In the swap-dependent approach, the rating assigned to the synthetic security reflects the lowest rating assigned to the underlying collateral and the swap counterparty or if a guarantee that meets Standard & Poor's criteria is used, the rating of the guarantor. In a variation of this model, synthetic securities transactions have been structured to include, but not depend on, a swap agreement. For these swap-independent transactions, Standard & Poor's ratings reflect the creditworthiness of the underlying collateral and do not address the credit quality of the swap counterparty or the likelihood that the swap may...
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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