Are credit rating agency ratings available for privately-held companies?
Credit rating agencies typically assign credit ratings for issuers of certain types of debt obligations, which may include some privately-held companies. Unfortunately, the recent financial crisis has raised concerns about the integrity and value of such agency ratings, whether for publicly-traded or privately-held companies. Security & Exchange Commission Chairman Mary Schapiro noted that investors consider ratings for decisions and, “that reliance [on agency ratings] did not serve them well over the last several years.” In the current environment, if credit rating agency assigned ratings (and upgrades/downgrades) are available, then these should be checked, but certainly should not be solely relied upon for counter party default probability assessments. Further, the Risk Limited Corp default probability assessment of counter parties is focused on just that, default probability, not necessarily potential investment returns.
