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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
![](https://apexcreditpartners.com/wp-content/uploads/sites/3/2023/02/internal-credit-grade.jpg?w=1024)
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
![](https://apexcreditpartners.com/wp-content/uploads/sites/3/2023/02/loss-given-default.jpg?w=1024)