easy · Corporate Credit Analysis

What is the 'Issuer-Level PD Floor' in the context of notching?

1. The fact that PD always increases as a company moves toward the end of its life cycle.
2. The rule that no corporate bond can ever be rated higher than its sovereign government.
3. The minimum level of cash flow required to avoid a rating downgrade.
4. The principle that an instrument's rating is ultimately limited by the issuer's default probability, regardless of how high its recovery may be.

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