How Long Does It Take to Do a Credit Rating?
One of the most-frequently asked questions when talking to a prospective credit rating client is: “How long will it take to get a credit rating?” The surprising part is that some clients come to a rating agency at the last minute or a few weeks before they need the actual credit rating.
For a simple debt issue, credit rating agencies typically quote 4-6 weeks from the time they get complete information. That period will allow them to do their data gathering, conduct the management meetings, write out the reports, and hold the Rating Committee meetings.
In some cases, where the transaction is more complex, the credit rating process may be something like 6-8 weeks. Securitization transactions come to mind. In a securitization transaction, the rating agency will have to look at several entities (e.g. the originator/seller; the special purpose vehicle or special purpose trust; the servicer; the trustee) and will have to assess the pool of assets that will generate the cash flows. There will likewise be voluminous documents (e.g. agreements relating to the sale or assignment of the assets, legal opinions) to review.
My advice to prospective credit rating clients, do not wait until the last minute. Be fair to yourself and to the rating agency concerned. Allowing the rating agency enough time to evaluate the company or the transaction increases the likelihood that risks will be assessed properly and that there will be enough data or information to base the rating on and that can only work to the client’s advantage.
What’s the longest time that I have seen a credit rating done? Some can take years, particularly when the client is not too keen on providing all the needed information. Such is not an ideal situation as it wastes the time and resources of both the client or ratee and the rating agency. The best approach is to decide whether you are serious about getting a credit rating and once decided, pursue it diligently by cooperating with the rating agency concerned.