Standard & Poor’s Ratings Services is requesting comment on its proposed methodology for assessing how captive finance operations affect the creditworthiness of nonfinancial corporate issuers. S&P defines captives as separate subsidiaries generating 70% or more of receivables from sales of a parent company’s goods or services whose strategic purpose is to generate such sales. One significant proposed change is that securitizations will be viewed as debts.
“We think that there will typically be incentive for a company to support its securitized assets in the case that they started to become stressed, and if the company had a need to rely on the securitization market going forward,” Adom Rosengarten, an S&P senior director of corporate ratings, said in a webinar last week.
The deadline for responses is March 30.
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