Sept 13 - Fitch Ratings describes in its newly-published special report ‘Analytical Features of Corporate Cooperatives’ how, in rating a corporate cooperative, the agency aligns its approach to corporate cooperatives with its corporate rating methodology, however analysts also apply four specific steps in order to assess cooperative-specific features and to include adjustments to financial metrics.
The first step is to identify the group structure of the entity to be rated and any potential support for the cooperative from outside the group. Second, Fitch may decide to adjust certain financial items, especially in relation to the way benefits are paid to the cooperatives constituent members. Third, the agency analyses the group’s corporate governance and the implications for financial flexibility. Fourth, Fitch considers whether in the event of default the cooperative would be treated differently from an ordinary corporation.
In the report, Fitch also discusses the distinctive factors of corporate cooperatives globally and lists the topics that Fitch analysts would typically investigate when rating a corporate cooperative. Several examples are included.
The scope of the report excludes consortia owned by non-cooperative corporations, banks (covered by Fitch Ratings’ Financial Institutions group), housing cooperatives (covered by public finance) and US electric cooperatives (US public power).
The report ‘Analytical Features of Corporate Cooperatives’ is available on the Fitch web site at ‘www.fitchratings.com’.
Link to Fitch Ratings’ Report: Analytical Features of Corporate Cooperatives