Rating Process

To obtain classification and better understanding of the entity’s operations, the team visits and interacts with the entity’s executives. The visits facilitate understanding of the processes, products, services, facilities, and equipment, and to evaluate the quality of technical personnel and form an opinion on the key variables that influence level, quality and cost of production.

The objective of management discussion is to better understand the business concept, strategy, governance, operations, financials, future prospects, and many other issues that can have a bearing on the rating. Before heading for management discussion, a formal agenda is sent, highlighting focus areas. Management discussion can be done through face-to-face meetings, site visit and video/teleconference, etc. as considered appropriate.

The analytical rating team performs a detailed analysis of all relevant factors using the sector-specific criteria and prepares a draft detailed rating report.

The analytical rating team send the draft rating report to the Rating Directorate for review of completeness and accuracy of information content.

The Rating Directorate send the reviewed draft rating report to the Rating Committee for deliberation and assignment of rating grade.

The Rating Committee meeting provides an opportunity for members to deliberate on the key rating factors, recommended rating grade, rationale, key rating drivers, rating sensitivities, and then assign rating grade. The committee consists of at least three (3) members, two (2) of which are independent non-executive members.

The assigned rating grade together with a draft report is communicated to the client along with rationale, setting out the principal grounds on which the rating is based. The client has the right to appeal the rating, in which case, the Rating Committee may reconvene only if there are new information that were not previously considered in the report.

In case the client disagrees with key issues in the report, it has the option to appeal for review within five (5) working days of receipt of the draft report. The appeal process is contained in Beacon Ratings’ "Rating Appeal Policy". If no written appeal for review is submitted within the stipulated time, the rating is considered to be accepted by the client for publication.

Once the rating is accepted and finalized, it is formally notified to the client in a rating letter, summarized rating report and a detailed rating report. The rating notification is also accompanied by a press release on Beacon Ratings’ website and to the media, both print and electronic.a

In an initial corporate entity rating assignment, the client has the prerogative to make the rating public or private. In case the client decides to go public (Beacon Ratings’ website, electronic and print media), then for the life of the rating service agreement, Beacon Ratings is duty-bound to inform the public of any change in the rating opinion and reserves the right to take such action without prior notice to the client if so warranted by circumstances.

Ratings once notified and published, remain under surveillance over the life of the rating service contract with the client or tenure of the financial instrument. Surveillance is an on-going and continuous process of monitoring changes in economic, business, financial and industry trends. Any change in rating of the client is publicly disseminated.

A client’s assigned rating may be withdrawn at the request of the client. Beacon Ratings’ decision to withdraw the rating may be due to lack of reliable information available or non-cooperation by the client which hinders the rating process. As part of the withdrawal process of a publicly disseminated rating opinion, an updated terminal rating opinion along with an indication of which party has initiated the rating withdrawal is disseminated to the public.

• The entity notifies Beacon Ratings within sixty (60) days advance under the terms of the rating service agreement to terminate the relationship.
• For financial instrument rating, the rating service agreement terminates when the rated instrument is redeemed. However, in the extreme scenario of non-availability of requisite information for the purpose of continuous rating, Beacon Ratings may withdraw from the rating.
• Entity rating is terminated either on the client's decision to withdraw or in extreme cases owing to reluctance by client to provide the required information.

In the relationship termination/suspension situations, Beacon Rating inform the public with reasons for the termination/suspension at the earliest.