Kroll Bond Rating Agency
| Industry | Credit Ratings, Financial Services |
|---|---|
| Founded | 2010 |
| Founder | Jules B. Kroll |
| Headquarters | New York City, United States |
Key people |
Jim Nadler (President) Christopher Whalen (SMD) |
Number of employees | 200 (approximate) |
| Website |
www |
Kroll Bond Rating Agency (KBRA) is a credit rating agency. KBRA publishes research and analyses that are available to the public domain free of charge. KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP). Its head office is located on 845 Third Avenue in Midtown, New York City.[1]
The firm was founded by Jules Kroll who purchased L.A.C.E. Financial, a Subscription Rating Service Company. KBRA is currently active in the CMBS, RMBS, ABS, Public Finance, Corporate Finance, Financial Guarantor, and Financial Institutions sectors.[2]
Credit Ratings
Kroll Bond Rating Agency (KBRA) assigns credit ratings to issuers and their obligations and, through its Subscription Rating Service (SRS), financial strength ratings to financial institutions, corporations and sovereigns.[3] KBRA issues both long-term and short-term credit ratings.[4]
Long-Term Credit Ratings
Kroll Bond Rating Agency (KBRA) assigns credit ratings to issuers and their obligations using the same rating scale. In either case, KBRA's credit ratings are intended to reflect both the probability of default and severity of loss in the event of default, with greater emphasis on probability of default at higher rating categories. For obligations, the determination of expected loss severity is, among other things, a function of the seniority of the claim. Generally speaking, issuer-level ratings assume a loss severity consistent with a senior unsecured claim. KBRA appends an (sf) indicator to ratings assigned to structured finance obligations.
| Rating | Long-Term Credit Rating |
|---|---|
| AAA | Determined to have almost no risk of loss due to credit-related events. Assigned only to the very highest quality obligors and obligations able to survive extremely challenging economic events. |
| AA | Determined to have minimal risk of loss due to credit-related events. Such obligors and obligations are deemed very high quality. |
| A | Determined to be of high quality with a small risk of loss due to credit-related events. Issuers and obligations in this category are expected to weather difficult times with low credit losses. |
| BBB | Determined to be of medium quality with some risk of loss due to credit-related events. Such issuers and obligations may experience credit losses during stress environments. |
| BB | Determined to be of low quality with moderate risk of loss due to credit-related events. Such issuers and obligations have fundamental weaknesses that create moderate credit risk. |
| B | Determined to be of very low quality with high risk of loss due to credit-related events. These issuers and obligations contain many fundamental shortcomings that create significant credit risk. |
| CCC | Determined to be at substantial risk of loss due to credit-related events, or currently in default with high recovery expectations. |
| CC | Determined to be near default or in default with average recovery expectations. |
| C | Determined to be near default or in default with low recovery expectations. |
| D | KBRA defines default as occurring if: There is a missed interest or principal payment on a rated obligation which is unlikely to be recovered, the rated entity files for protection from creditors, is placed into receivership or is closed by regulators such that a missed payment is likely to result, or the rated entity seeks and completes a distressed exchange, where existing rated obligations are replaced by new obligations with a diminished economic value. |
KBRA may append - or + modifiers to ratings in categories AA through CCC to indicate, respectively, upper and lower risk levels within the broader category.
Short-Term Credit Ratings
Kroll Bond Rating Agency's short-term ratings indicate an ability to meet obligations that typically have maturities of thirteen months or less when issued by corporate entities, financial institutions, and in connection with structured finance transactions. When applied to municipal obligations, KBRA's short-term ratings typically indicate an ability to meet obligations of three years or less. Short-term ratings may be assigned to both issuers and to specific obligations. As compared to long-term ratings, greater emphasis is placed on an obligor's liquidity profile and access to funding. KBRA appends an (sf) indicator to ratings assigned to structured finance obligations.
| Rating | Short-Term Credit Rating |
|---|---|
| K1 | Very strong ability to meet short-term obligations. |
| K2 | Strong ability to meet short-term obligations. |
| K3 | Adequate ability to meet short-term obligations. |
| B | Questionable ability to meet short-term obligations. |
| C | Little ability to meet short-term obligations. |
| D | KBRA defines default as occurring if: There is a missed interest or principal payment on a rated obligation which is unlikely to be recovered, the rated entity files for protection from creditors, is placed into receivership or is closed by regulators such that a missed payment is likely to result, the rated entity seeks and completes a distressed exchange, where existing rated obligations are replaced by new obligations with a diminished economic value. |
KBRA may append a + modifier to ratings in the K1 category to indicate exceptional ability to meet short-term obligations.
Bank Financial Strength Ratings
The Kroll Bond Rating Agency (KBRA) financial strength rating is a measure of the overall financial condition of an institution and its ability to meet its credit obligations.
| Rating | Bank Financial Strength Rating |
|---|---|
| A | An institution in strong financial condition that is well capitalized, liquid and profitable. The entity is highly likely to meet its credit obligations under severe economic, financial and business conditions. |
| B | An institution in sound financial condition that is likely to meet its credit obligations under difficult economic, financial and business conditions. |
| C | An institution with an adequate financial condition but is more susceptible to adverse changes in economic conditions that could affect its ability to meet its credit obligations. |
| D | An institution whose financial condition is judged to be relatively weak and its ability to meet financial obligations could be affected by adverse economic, financial or business conditions. |
| E | An institution that is likely to have financial problems and poor financial ratios. Careful consideration should be made concerning investments in this institution. The institution has a much higher probability of failure than institutions with higher ratings. |
| NB | A new institution which is less than three years old and which is not rated, but its financial data is presented and an "NB" is shown in the rating field. |
| NT | A new savings & loan (S&L) which is less than three years old and which is not rated, but its financial data is presented and an "NT" is shown in its rating field. |
| NR | An atypical bank, bank holding company or S&L, or an institution missing key financial data necessary to derive a rating. |
SRS Default Ratings
In addition to Financial Strength ratings, KBRA’s Subscription Rating Service may assign Default Ratings to certain entities. KBRA's Default Ratings are intended to reflect an entity’s risk of default and/or bankruptcy. The use of lower case symbols distinguishes these ratings from KBRA’s Long-Term Credit Ratings, which address both default probability and severity of loss.
| Rating | SRS Default Rating |
|---|---|
| aaa | Determined to have almost no risk of default or bankruptcy. Assigned only to the very highest quality entities able to survive extremely challenging economic events. |
| aa | Determined to have minimal risk of default or bankruptcy. Such entities are deemed very high quality. |
| a | Determined to be of high quality with a small risk of default or bankruptcy. Entities in this category are expected to survive stress environments. |
| bbb | Determined to be of medium quality with some risk of default or bankruptcy. Such entities may experience difficulties during stress environments. |
| bb | Determined to be of low quality with moderate risk of default or bankruptcy. Such entities have fundamental weaknesses and may be vulnerable. |
| b | Determined to be of very low quality with high risk of default or bankruptcy. These entities contain many fundamental shortcomings. |
| ccc | Determined to be at substantial risk of default or bankruptcy, or currently in default. |
| cc | Determined to be near default or in default. |
| c | Determined to be very near default or in default. |
| d | In default. |
References
- ↑ "KBRA - Kroll Bond Rating Agency, Inc.". krollbondratings.com. Retrieved 2015-05-22.
- ↑ "The New York Times". nytimes.com. Retrieved 2015-05-22.
- ↑ "KBRA - Kroll Bond Rating Agency, Inc.". krollbondratings.com. Retrieved 2015-05-22.
- ↑ "KBRA - Kroll Bond Rating Agency, Inc.". krollbondratings.com. Retrieved 2015-05-22.