What is a shadow rating?

Shadow evaluation is a type of credit rating that helps companies to determine how well the proposed debt problem would attract investors if this problem was published on the market. This evaluation is usually prepared by a recognized credit agency, but is not available to potential investors. Businesses will often be used by this source by measuring whether it is likely that a bond problem or other debt problem will achieve the desired purpose. This evaluation may also be useful in the help of the company to decide when to issue a bond based on current economic circumstances and prevailing market conditions.

Shadow evaluation is also used as a means of evaluating bonds that are not eligible for trading on the secondary market. In this case, bond evaluation is often performed by standard and poor, while the S&P evaluation is available to the issuer. Credit rating is in turn made available to potential investors who have expressed a certain intereston the issue of bonds.

Based on the results of the shadow evaluation, the problem of bonds may be abandoned or simply delayed. In situations where the basic reasons for evaluation suggest that investors are less likely to buy a debt problem within the current economic climate, delaying the release of the bond until the climate changes are considered to be the best interests of the issuer in the long run. If the results indicate that the bond problem is likely to generate less than sufficient interest regardless of the general state of the economy, the issuer may decide to rework the bond before the procedure with the problem or may decide to promote any other means to generate income.

While the shadow evaluation is not reported to the general public at the time it is ready, the bond issuer may decide to publish information later. This sometimes happens as soon as the decision has been made to move forward with the bond and emite questionNT believes that the detection of the evaluation will have a positive impact on the reaction of investors on the new bond. For example, if the shadow evaluation of the bond has been favorable, the issuer may decide to share information in the public environment to draw attention to this evaluation. This is especially true if the rating service or agency evaluating the bond is highly respected among investors.