medium · Corporate Credit Analysis ratings
A senior unsecured bond of a BB+ issuer is typically rated equal to the ICR.
However, if that issuer's capital structure becomes 'top-heavy' with a large amount of senior secured debt, what might happen to the unsecured bond's rating?
- It may be notched down due to reduced recovery prospects for unsecured holders.
- It will be notched up to compensate for the higher leverage of the company.
- Nothing; senior unsecured debt always maintains the same rating as the ICR.
- It must be notched up because unsecured debt is less complex to restructure.
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