The service provides a professional opinion based primarily on publicly available information, including, but not limited to, information contained in investment statements and prospectuses. These are the legal minimum requirements for information that has to be made available to the public for a fixed interest issue and therefore must contain all information that is material to making an informed investment decision.
BondWatch uses a ratings template that assesses 40 different criteria for bond issues, which include a wide range of qualitative factors such as the history and ownership of the issuers, the quality of the governance and management structures, as well as quantitative analysis of the financial statements and trends.
There are eight levels in the ratings table with each level indicating a different tier of assessed risk. The ratings bands range from G1 through to G8, with G1 implying the best credit characteristics and excellent security, while G8 is recommended for sophisticated investors only.
BondWatch utilises research undertaken by Grosvenor Financial Services Group. Grosvenor is an independent financial services and research organisation with substantial experience in banking, investing and financial products, including bond and fixed interest products and securities.
The BondWatch service is subject to significant peer review and scrutiny from senior management.
The ratings are not about providing a pass or fail assessment but rather they are a tool to help investors and financial advisers appraise what investments are appropriate for an investor's risk appetite. Importantly, the ratings are more than just a credit risk assessment. By explicitly looking at the quality of the lending activities and assets, the liquidity profile and operating environment, the overall rating also incorporates a component relating to recovery in the event of default.