Busy Streets

One characteristic of the credit rating process is that it is interactive. That means that the analytical team from the credit rating agency will have to “interact” a lot with management on the side of the ratee-company.

Once the management meeting agenda or questionnaire has been finalized by the analysts assigned to the account, the date for the management meeting may or can be set. From experience, the lag between the time the questionnaire is sent out to the time that the actual meeting is done can range anywhere from 3 to 7 days, typically. This ensures that top management, on the side of the company being evaluated, has enough time to address all the issues and questions raised by the analysts. This will allow a good amount of information to flow between the two parties — something that is critical to an effective and efficient rating process.

On the day of the meeting itself, the meeting may take anywhere from 2 hours to a whole day, depending on how the meeting is structured. Some companies prefer to do a question and answer type of discussion; some prefer to give written answers before the meeting and just do follow up questions and clarifications during the meeting itself; while some prefer doing a formal presentation. There is really no one best way to do this — it really depends on the preference of management and what it deems to be the best way for it to communicate its story to the analysts concerned.

In terms of who should be attending the meeting on the side of the company being evaluated, the group usually includes the Chief Executive Officer and the Chief Finance Officer at the least. In some cases, members of the Board of Directors or other heads of operating units or areas may be invited to join the meeting. The minimum requirement is to have on board individuals who will be able to address the concerns and questions of the analysts.

The importance of the management meeting as part of the credit rating process cannot be overemphasized. It is a way by which the analytical team can clarify and assess issues which have been identified as a result of the credit review process. It is also critical in the assessment of management — their knowledge of the business; the cohesiveness of the team; and even their management styles and personalities. All these aspects will prove helpful to the analysts as they complete their credit rating reports.