Glossary: FI Module 16 — Credit Analysis: Corporate Issuers
| Term | Definition |
|---|---|
| Corporate family rating (CFR) | The overall credit rating of a corporate issuer (Moody’s terminology) |
| Corporate credit rating (CCR) | The overall credit rating of a corporate issuer (S&P terminology) |
| EBIT margin | EBIT / Revenue; measures operating profitability |
| EBITDA margin | EBITDA / Revenue; measures operating cash flow profitability before non-cash charges |
| Leverage ratio | Debt / EBITDA or Debt / Capital; measures reliance on debt financing |
| Coverage ratio | EBITDA / Interest expense; measures ability to service debt from operating earnings |
| FFO (funds from operations) | Net income + depreciation + amortization + deferred taxes; a cash flow measure for credit analysis |
| Seniority ranking | The order of priority for claims in liquidation: secured > senior unsecured > subordinated |
| Cross-default | A provision that triggers default on a bond if the issuer defaults on any other debt |
| Structural subordination | Holding company debt is effectively junior to operating subsidiary debt because subsidiary assets satisfy subsidiary claims first |
See also: Credit Risk