medium · Corporate Credit Analysis ratings
A fictional steel producer, Andean Iron, is rated BBB by a major agency.
If the agency identifies that a sovereign default in its home country would trigger a 'Transfer and Convertibility' (T&C) event, but Andean Iron generates 80% of its revenue in USD held in offshore accounts, how might the company's rating relate to the sovereign ceiling?
- The company rating must be at or below the sovereign rating.
- The company rating can pierce the sovereign ceiling.
- The rating is automatically downgraded to CCC upon sovereign default.
- The T&C risk is irrelevant if the company is privately owned.
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