Internal Rating System
Internal Credit Grade
Apex utilizes a risk rating system based on a proprietary internal credit grading methodology.
Internal grading process supplements the public rating agencies’ viewpoints.
- Incorporate six standard risk categories to determine the issuer’s overall credit grade
- Industry/industry segment
- Competitive position within industry
- Earnings/operating cash flow
- Asset/liability values
- Financial flexibility/debt capacity
- Management and controls
Loss Given Default
Loss Given Default (LGD) is an estimate of the recovery Apex expects to receive in the event a company defaults.
Internal loss estimates supplement the public rating agencies’ recovery analyses.
- Analysts estimate LGD by ascribing an industry-specific distressed valuation multiple
- Cash flows are discounted to approximate earnings in a default scenario