The document outlines the credit ratings methodology used by analysts. The process involves analyzing both a company's business risk profile and financial risk profile. The business risk analysis considers factors like country risk, industry risk, competitive position, management quality, and strategic factors. The financial risk analysis looks at accounting practices, cash flow adequacy, governance, liquidity, and debt characteristics. Finally, analysts use a matrix to determine the overall risk profile and corresponding credit rating based on where the business and financial risk assessments fall on the spectrum.

1. Credit Ratings Methodology

2. CREDIT RATING PROCESS

3. Credit Ratings Methodology Business Risk Profile Analysis Financial Risk Profile Analysis

5. Business Risk Country Risk Company Position Industry Factors Profitability / Peer Group Comparisons Political Economic Industry – Specific factors Foreign exchange Industry Trends Industry Structure Market Size Growth Potential Cyclicality Bases of Competition Changing Technology Operating Risk Regulatory Environment Competitive Factors Market position Keys to Success Size Diversification Management Validation of “Company Position” Trends Quality of Earnings & Analytical adjustments Peer Group Comparisons

6. Financial Risk Accounting Cash Flow Adequacy Governance Risk Liquidity / Short-term Factors Accounting Regime Reporting & Disclosure Analytical adjustments Ownership Board of directors Management practices Financial Strategy Risk Tolerance Accounting Practices Internal controls Focus on debt service capability Analytical distinctions with profitability Cash flow measures / ratios Operating sources & uses Of liquidity Other potential calls on Liquidity Debt Characteristics Bank credit facilities

7. BUSINESS RISK/FINANCIAL RISK MATRIX # The matrix does not apply to the lowest rungs of credit spectrum i.e. ‘CCC’ category and below Note: The above grid is only an indicative framework to guide an Analyst in determining the rating. Risk Profile Minimal Moderate Intermediate Aggressive Highly Leveraged Excellent AAA AA A BBB BB Strong AA A A- BBB- BB- Satisfactory A BBB+ BBB BB+ B+ Weak BBB BBB- BB+ BB- B Vulnerable BB B+ B+ B B-