Standard & Poor’s Fundamentals of Corporate Credit Analysis

A guide that helps credit professionals understand the inherent risks of different debt instruments and rank the default risk of borrowers

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What is Standard & Poor’s Fundamentals of Corporate Credit Analysis?

Standard & Poor’s Fundamentals of Corporate Credit Analysis is an in-depth guide authored by experts at Standard & Poor’s, a US-based financial services company that provides credit ratings on countries, bonds, commodities, and other investments. S&P’s guide provides credit professionals with the knowledge that they need to determine the financial strength of corporate borrowers, as well as understand the inherent risks present in the different corporate debt instruments.

Standard & Poor's Fundamentals of Corporate Credit Analysis

The guide also gives credit professionals with the essential tools that they require to make credit predictions, evaluate the various business risks, and assess the recovery prospects of specific financial instruments in the event that a company is declared bankrupt.


  • Standard & Poor’s Fundamentals of Corporate Credit Analysis is a framework created by experts at Standard and Poor’s for use by credit professionals and students.
  • The guide helps credit professionals to understand the inherent risks present in the different debt instruments and rank the default risk of borrowers.
  • It provides students with the tools required to analyze a company to determine its creditworthiness and make the final credit decision.

Authors and Publishers

The Fundamentals of S&P’s Corporate Credit Analysis is written by two authors – Blaise Ganguin and John Bilardello.

John Ganguin was a managing director in Standard & Poor’s Corporate and Government Ratings Department, and he was responsible for supervising multiple teams of more than 150 credit analysts. He also taught in various institutions, such as INSEAD, and the Universities of Zurich, Nottingham, and Clermont Ferrand. Ganguin also established the Standard & Poor’s Leverage Finance team in Europe.

John Bilardello was a managing director in S&P’s Corporate and Government Ratings Department. He was also the Global Head of Corporate Credit Ratings, a department with more than 600 analysts and over 4,000 ratings. With over 33 years at S&P, Bilardello is considered an expert in credit analytics, business strategy, and credit analyst management.

Standard and Poor’s is responsible for publishing research and ratings on stocks, bonds, and commodities. It is the leading index provider of independent credit ratings, indices, investment research, data, and valuations. Founded in 1860, the company publishes a wide variety of benchmark indices that helps investors evaluate potential investments and make financial decisions. S&P is one of the three main credit rating agencies in the United States; the other two agencies are Fitch Ratings and Moody’s Investor’s Service.

Components of Fundamentals of S&P’s Corporate Credit Analysis

The guide is organized into the following three main parts:

Part I Corporate Credit Risk

The corporate credit risk section helps credit analysts identify all the risks present in the company being analyzed, measure its credit rating through financial forecasting and benchmarking with peers. It focuses on the factors that determine the operating and financial performance of a company to determine its creditworthiness.

Part I of the book comprises six chapters, which include the following:

Chapter 1: Sovereign and Country Risks

The chapter covers the powers that sovereign governments hold, and how the power affects the financial and operating environment of corporate entities. It also discusses how the characteristics of a country such as infrastructure, labor force, the legal system, educational system, natural resources, etc. shape the businesses that operate in that country.

Chapter 2: Industry Risks

Chapter 3: Company-specific Business Risks

The chapter covers the various risks that are inherent in a business. It starts by identifying the factors that drive competition to determine the organizations that have the potential to succeed or fail.

Chapter 4: The Management Factor

Chapter 5: Financial Risk Analysis

Chapter 6: Cash Flow Forecasting and Modeling

Part II Credit Risk of Debt Instruments

The second section of the Fundamentals of Corporate Credit Analysis covers the inherent risks that are present in debt instruments used by companies as a source of funding. Some of the risks depend on the type of debt instrument, terms, and conditions that guide the relationship between the lender and the borrower, and how the various financial instruments stack up against each other.

The section includes the following three chapters:

Chapter 7: Debt Instruments and Documentation

The chapter details the characteristics and uses of the different types of debt instruments that are available to borrowers. It also covers debt instruments documentation such as loan agreements and loan indentures.

Chapter 8: Insolvency Regimes and Debt Structures

The chapter covers the recovery prospects of the different debt instruments when a company becomes insolvent. It also covers how collateral security, subordination, and insolvency regimes affect creditors when a borrower is experiencing financial turmoil.

Chapter 9: Estimating Recovery Prospects

The chapter details the different scenarios that can lead to insolvency among companies. Credit analysts also learn how to estimate the recovery prospects for each type of debt instrument that is available to companies.

Part III Measuring Credit Risk

The section covers in detail the credit risks that are inherent in companies, as well as in the different debt instruments.

It includes the following two chapters:

Chapter 10: Putting it All Together: Credit Ranking

The chapter equips students with skills on how to use credit risk scoring systems to perform credit assessments. The text includes case studies in the appendices that students can use as a practical guide to rank the default risk of borrowers and recovery prospects of debt instruments.

Chapter 11: Measuring Credit Risk: Pricing and Credit Risk Management

The chapter teaches students how to use credit risk scoring to estimate the pricing of debt instruments and the risk of loss. It also covers the Basel II accord and its proposed approach to credit risk measurement.

More Resources

CFI is the official provider of the global Commercial Banking & Credit Analyst (CBCA)™ certification program, designed to help anyone become a world-class financial analyst. To keep advancing your career, the additional resources below will be useful:

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