Alpen Capital raises awareness of Credit Risk and Ratings
Dubai, 10th March, 2009
In view of the global credit crisis, Alpen Capital (ME) Limited is raising the focus and awareness of credit risk and ratings. Last year it launched a Ratings Advisory service to complement its existing Corporate Advisory services, including Capital Markets, Debt Syndication, Mergers & Acquisitions and Project Advisory. Alpen Capital provides a comprehensive and professional advisory service on all aspects of fund raising, including ratings by the major international rating agencies, Standard & Poor's, Moody's Investors Service and Fitch Ratings.
Global credit crunch brings credit quality to the fore
Corporate borrowers that traditionally had no problem renewing their credit lines with relationship banks are now having their credit standing questioned and are forced to pay higher margins on their loans. This has prompted borrowers to consider alternative funding sources and to seek a third party opinion on their credit profile.
"Credit ratings are fundamental to the business of banking and capital markets. A lot of the work we do today at Alpen Capital and Bank Sarasin-Alpen is driven by our expertise in the field of credit risk and ratings as well as our affiliation to 'AAA' rated Rabobank. Our clients feel comfort in dealing with one of the strongest banks in the world, particularly at this time of great uncertainty in the financial markets, and an institution that understands credit risk" says Rohit Walia, Chief Executive Officer & CEO of Alpen Capital.
Balance sheet restructuring now top priority for finance managers
Many finance managers have been caught unaware by the extent of the credit crisis and the liquidity squeeze. Most corporations in the Middle East have traditionally relied heavily on short term debt. With the credit crisis now in its second year, corporations are forced to rethink their funding strategies and restructure their balance sheets.
Alpen Capital has a long tradition of advising Middle Eastern corporations on balance sheet restructuring and the transition towards a more sophisticated funding strategy, including the raising of capital outside the regional banking markets. The Ratings Advisory service forms a critical component in Alpen Capital's service offering and an important consideration in every client's funding strategy. "Having a world-class Ratings Advisory capability is of great advantage to Alpen Capital and its clients. The introduction of this service has been very timely and well received by our clients, many of which are now in the process of getting rated with one or two of the leading rating agencies" says Sanjay Vig, Managing Director at Alpen Capital.
Credit ratings open door to diversification of funding sources and lower cost of debt
The key benefit in a credit rating is the potential to reduce the funding cost, by diversification of funding sources and accessing international capital markets and rating sensitive investors. There is also a lower capital charge for banks lending to rated entities under the Basel II regulatory framework. A credit rating offers greater financial flexibility to issuers and enables them to access longer term funding and to raise capital in greater size.
Other benefits to a credit rating include the raising of a company's public profile, the addressing of any governance or transparency concerns, improvement in payment terms with suppliers, reduction in bonding fees etc. The credit rating is not only a tool to reduce funding cost, but can be used to address bigger issues that are essential to the success of a business. "When we get involved with a client for Ratings Advisory services, we normally start by reviewing and redefining a company's public profile, its strategies, financial policies etc. The work we do can be compared to preparatory work for an IPO. Clients will often find the interaction with a Ratings Advisor and ultimately the Rating Agencies to be a useful exercise in critically assessing its strategies, policies, controls and procedures" says Tommy Trask, Executive Director at Alpen Capital.