KIS 채권평가 - Beyond Pricing
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Introduction
Introduction
- KIS Pricing
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Asset Pricing
Asset Pricing
- Bond Pricing
- Alternative Product Pricing
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Fund Evaluation
Fund Evaluation
- Bond Index
- ETF
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Solution
Solution
- Solution Service
- Consulting Service
- Contents Service
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Beyond Pricing
Beyond Pricing
- KIS-Net
- Data Providing
Asset Pricing
JUNK BOND
JUNK BOND
- Bonds issued by the corporation with low credit ratings , which means high risk, high return.
- The JUNK rating means that the timely repayment ability can be greatly influenced by external or internal changes. The rating implies speculative element at this stage.
- Local Credit rating agency has ratings between AAA~D (20levels)
- Investment grade : AAA~BBB- ratings
- JUNK grade: below BB+ rating
Pricing Method
- The pricing of Junk Bond which has speculative elements is based on additional risk compared to the investment grade.
- Refer to the allowance for bad debt based on asset quality classification of FSS.
- Junk Spread and cash flow depreciation rates for each grade were calculated, than priced by zero pricing and YTM method
FSS Forward Looking Criteria and credit rating
| Rating | Category | Allowance for bad debts required | 내용 |
|---|---|---|---|
| Investment grade(AAA~BBB-) | Normal | Above 0.85% | Industrial risk, risk, business risk, and financial risk are generally low or moderate identities, capacity for timely payment is strong. |
| BB+~BB- | precautionary | Above 7% | Potential insolvent risk , If management does not take any further remedial action |
| B+~B- | substandard | 20% | There are clear risks that threaten the repayment of the debt, and if such a defect is not remedied |
| CCC~C | Doubtful | Above 50% | Capacity for timely payment is doubtful or difficult |
| D | estimated loss | Above 100% | Immediate default or in default as of present time |
