Internal Rating System

Internal Credit Grade

Apex utilizes a risk rating system based on a proprietary internal credit grading methodology.

Internal grading process supplements the public rating agencies' viewpoints.

  • Incorporate six standard risk categories to determine the issuer's overall credit grade
    • Industry/industry segment
    • Competitive position within industry
    • Earnings/operating cash flow
    • Asset/liability values
    • Financial flexibility/debt capacity
    • Management and controls

Loss Given Default

Loss Given Default (LGD) is an estimate of the recovery Apex expects to receive in the event a company defaults.

Internal loss estimates supplement the public rating agencies' recovery analyses.

  • Analysts estimate LGD by ascribing an industry-specific distressed valuation multiple
  • Cash flows are discounted to approximate earnings in a default scenario

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