medium · Debt Capital Markets credit-ratings-risk
In the context of 'Fundamental Credit Analysis', why is the 'Maturity Profile' (or maturity wall) important alongside leverage ratios?
- The maturity wall, rather than the credit spread, directly determines the interest rate the company pays today.
- Longer outstanding debt maturities automatically and mechanically lead to materially lower reported EBITDA add-backs.
- It precisely tells the credit analyst which single rating agency, of the three, is most likely to downgrade the issuer next quarter.
- A company with low leverage can still fail if it cannot refinance a large lump-sum maturity when the debt markets are closed.
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