Issue and Issuer Credit Ratings
There are several ways by which we can classify credit ratings. The first classification we shall discuss are: issue and issuer credit ratings.
An issue credit rating is also known as a debt credit rating. The credit rating is given in relation to a specific debt issue. The debt issue can be a commercial paper, bond, or asset-backed security. The rating takes into account specific items (e.g. amount, maturity, other terms) about the debt issue and evaluates a company’s capability to pay that particular issue. An issue credit rating can be short-term or long-term, depending on the issue, and the issue is covered by a credit rating for as long as the debt issue is outstanding. For an issue credit rating, projections for the period covered by the issuance would need to be submitted.
An issuer credit rating is also known as a corporate credit rating or a counterparty credit rating. This rating is given not in relation to a particular debt issue but is a gauge of the over-all creditworthiness of the company. A corporate credit rating is typically good for a year and is subject to renewal should the company want to keep the credit rating updated. For a corporate credit rating, PhilRatings asks for projections for the next three years.
There is some relation between an issue credit and an issuer credit rating. The two are closely tied as it is quite difficult to isolate one from the other. However, there may be differences between the two considering the maturity schedule of outstanding debts, the terms and conditions of specific debts, credit enhancements provided to particular issues, among others. It is hard to imagine a situation though where one is so far away from the other. At most, there may only be a difference of one to a few notches.