• Delegates who have at least three years’ banking experience, ranging between an intermediate and senior level of their respective professional banking careers, will benefit from attending the course. This course is also aimed at professionals with a minimum of three years’ applied experience in corporate credit analysis.
• Financial professionals within large corporates,who work regularly with banks and wish to learn how banks assess their credit risk rating will benefit from attending the course. The course will also help you negotiate debt facilities with banks.
• A good working knowledge of Excel and cash flow forecasting is also beneficial but not essential.

This training programme will provide you with the full range of credit diagnostic skills you need to assess credit risk inherent in potential banking clients in the GCC region. The focus of the course is for you to develop holistic credit analysis skills to examine the full range of internal quantitative as well as external business environmental, qualitative, strategic and management risks that can impact upon corporate cash flows of clients and therefore a client’s ability to honour its debt repayments. Through cash flow forecasting and financial modelling, you will learn how to anticipate future risk crystallisation and its impact on future client cash flows.

• Understand the core principles of holistic credit risk analysis bankers use to assess a corporate client’s credit risk rating
• Use financial statements to undertake the credit risk of corporate clients
• Identify working capital needs through the cash conversion cycle and understand how it affects liquidity
• Identify acceptable levels of key ratios used for holistic quantitative and credit risk analysis, specifically those used to measure a company’s liquidity, capitalisation, debt service, profitability and overall performance
• Identify Early Warning Signals (EWSs) arising from ratio analysis
• Conduct qualitative analysis as part of the holistic credit analysis process, including strategic analysis, management risk analysis, external risk analysis, and competitive pressures in a company’s market

Module One - Fundamentals of Credit Risk

• The key macro and micro-financial concepts behind, and drivers of, credit risk
• Measurement of credit risk and adverse outcomes
• Assessing credit risk and default probability of loan portfolios
• Key determinants for managing credit risk:
• Probability of default (PD)
• Exposure at default (EAD)
• Loss given default (LGD)
• Credit migration and transition matrices
• Fundamental analysis of financial statements, key ratios, qualitative characteristics of the balance sheet
• Off-balance sheet and contingent credit risk
• Market-based approaches, bond spreads, swap rates
• Counterparty credit risk
• Credit scoring, credit risk modelling, risk profiling and assessing creditworthiness

Module Two - Credit Ratings Methodologies and Application

• Review of rating classifications systems of the major Credit Rating Agencies (CRAs)
• The principal credit rating agencies – Moody’s, Standard & Poor’s, Fitch
• Overview of the rating methodologies – issuer analysis, historical data, business cycles
• Commercial paper ratings
• Sovereign ratings – approach to developed markets and emerging markets
• Conflicts of interest - representing credit issuers but designed to protect credit purchasers

Module Three - Capital Charges and Accounting Principles

• Review of the distinction between the banking book and the trading book
• Basel III attempts to address regulatory arbitrage
• Treatment of securitizations and off-balance sheet exposures
• Available for Sale issues – impacts on liquidity, high-quality liquid assets (HQLA), the rigidity of balance sheets

Module Four - Counter-Party Credit Risk                                          

• Distinguish the separate components of credit risk:
• Probability of default by obligor – how reliably can it be estimated?
• Probability of downgrade or widening credit spreads of counterparty
• Recovery rate – what percentage of obligation can be recovered after default?
• Credit exposure – estimating loss magnitude in relation to capital buffers

• Overview of the sensitivity of credit to market risk, interest rate risk, systemic risk
• Explanation of the techniques for conducting stress tests
• Back testing using historical returns
• Stress testing using hypothetical returns
• Explanation of Principal Components Analysis