Growing need of Credit Skills – Video talk by Sandip Ghose, Director NISM
Another step towards development of Bond market…
Catch Mr. Biharilal Deora- Principal Advisor, Credit Research Programs at Association of International Wealth Management of India (AIWMI) speaking about the CCRA certification program being launched by AIWMI.
With financial markets surprising us every day with their wayward movement, safer products giving negative returns, stock market’s respected companies going bust because of management and financial issues and the double whammy of currency and political governance, as a financial professional like never, you must have more understanding on the investment options that you recommend to your clients.
Every investment decision should ultimately be based on one question: “Do you get paid enough for the risk?” Four essential building blocks of fundamental credit research can help you answer this question confidently.
- Business fundamentals: First, you need to acquire a deep understanding of the issuing company’s business fundamentals, including the competitive position and operational performance as well as wider industry trends.
- Issuer analysis: The next step, a central concern of the analysis, is to assess the credit quality of a specific issuer: What is the probability and severity of default? To this avail, you will thoroughly analyze the financial performance of an issuer, including profit/loss, balance sheet and cash flow statements, and also review the liquidity situation and potential off–balance sheet liabilities (pension liabilities, etc.)
- Security analysis: Thirdly, you need to analyze the specific security and understand how different positions in the capital structure and documentation details affect a particular bond issue.
- Recommendation: Finally, the best analysis is pointless if not accompanied by a specific recommendation, which takes into account the analysis from the first three building blocks and combines it with credit metrics and price information from comparable issuers and securities.
In light of this situation facing the Indian financial services sector, Association of International Wealth Management of India (AIWMI) is launching the prestigious international certification program, Certified Credit Research Analyst (CCRA). For more details log in to www.aiwmindia.com.