I have been watching another conversation on the site with some interest: https://www.proformative.com/questions/managing-credit-rating. It's all about companies managing their credit ratings with D&B. I think that is more about small companies. For my company the issue is managing S&P's and Moody's ratings. They have our bonds rated below where we believe we should be (we have reasonably predictable cash flow and a strong balance sheet, but we are a mid-sized public company). Has anyone had luck working with the agencies to get their ratings changed and if so, what does and doesn't work? All ideas are appreciated.
Managing my company's credit rating with S&P/Moody's
Answers
I made an attempt at this two companies back and they were very difficult to work with. Basically you have to call in the front door and find the group and analyst who is working on your credit. You may know this already if they have reached out to you during their analysis: sometimes they do, sometimes they don't (I discovered).
Then it's your model against their model. Have a good model.
Seriously, they are putting your public financials and forward looking statements through a series of algorithms they have developed and you have to convince them to change something: methodology, the future assumptions, even their algorithms. It will help if you come in having done homework on companies in a similar situation as yours - that is, same size, industry, business model, etc. Good luck!
I can confirm that you need to have done your homework on comps before any interaction with them. Then have your story prepared. I found them not entirely intransigent, but they are much tougher to work with as a small company than as a major corporation.
You mention balance sheet strength and cash flow but not profitability, Profitibility is a key part of the cash flow [EBITDA] rating agencies evaluate. Capitalization ratios, including significant leases, are important, as is working capital
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