Rating methodology

Which public rating methodology the agency will use to rate the company, and whether it plans to change the methodology anytime soon.
Potential drivers of the company's rating: A company can request that each agency identify the company's potential rating drivers using publicly available data. Additionally, the company should ask the agency about the common rating drivers and themes it is currently observing within the company's business sector.
Which organizations are in the peer group that the rating agency will use to benchmark the company.
How the agency defines and calculates key ratios, such as leverage and interest coverage.
Details of any in-house models, such as capital models, that the rating agency uses as part of its analysis.
How the agency would rate bonds issued by the company, including hybrid bonds, and what the relationship looks like between a company's rating and its bonds' ratings.
If the company is part of a group, how its rating might be impacted by the presence of other members of the group and whether other entities in the group would need to be rated.

Rating agency background

Which analysts will cover the company and maintain communication with the company. The agency should provide details about the analysts' experience, their current portfolio of clients, and the location of their office.
Whether the rating agency has the capacity to deal with both the first-time rating process and the ongoing relationship with the company. The agency should specify exactly what information (both current-period and historical) the company will need to provide.
How long the agency will take to provide the rating after it has been engaged by the company.
Whether the agency can provide statistics to show the relative stability of its credit ratings.
How many companies the rating agency covers in the company's market sector.
When the agency last updated its rating methodology, and whether it publishes sector reports on a regular basis.

Rating process and documentation

How the agency will ensure that information which the rated company considers confidential will remain confidential.
What the agenda will look like for the "management meeting." During the rating process, the agency will want to meet with senior management of the company it's rating; agencies usually accomplish this by organizing a one-day visit to corporate headquarters. The agency will send an agenda and a question list to the company in advance, and the company should prepare presentations based on these.
How the rating committee will make the rating decision. The rating committee is the body within the rating agency that makes the final decision on a company's rating level. The analysts that interact with the company present their findings to the rating committee after they have gathered all the information they need.
How the rating agency will make public announcements. The agency should clarify how much time the company will get to review agency press releases and what type of information it will be able to challenge. Usually after a rating committee has provided its opinion, the only things that can change in public announcements are factual inaccuracies or confidential information.
Circumstances under which the company will be able to appeal the outcome of the rating committee decision, and the process for making an appeal if the company chooses to do so.
Circumstances under which the company will be able to keep the rating private if it wishes to. Similarly, the company should clarify which circumstances would enable it to provide the private rating to other parties on non-public transactions.
The process for withdrawing the rating in the future, should the company decide to drop its rating.
The fees that the agency will charge for rating the company, and for rating the organization's bonds and loans.
Whether the rating agency can rate the company under two or more states. For example, if the company is considering a more highly leveraged balance sheet, the rating agency may be able to provide a rating on both its current leverage level and an alternative leverage level. This would likely result in additional fees payable to the agency.

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How to Work With Credit Rating Agencies

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