Sectoral ratings Methodology

Sector @ratings measure the average level of non-payment risk associated with companies in individual economic sectors. A rating reflects the influence of the economic outlook and average company financial situation on payment behaviour in short-term commercial transactions in a particular sector. To determine Sector @ratings, Coface combines three types of measurements:

- the vulnerability of economic conditions in the sector, which reflects the influence of market prospects, price levels, and production costs on company solvency
- company financial solidity in the sector, which reflects the capability of companies to cope with economic downturns
- payment experience on transactions payable in the short-term as reflected by Coface databases.

Coface establishes Sector @ratings on ten levels ranging from A+ for the lowest risks to D for the highest according to the following definitions:

A+
A
A-

The economic environment has been good in the sector and has had a positive influence on the company financial situation. Payment experience has been satisfactory. Default probability has been low on average.
B+
B
B-		In an essentially favourable economic environment nonetheless not safe from short-term deterioration with negative repercussions on the company financial situation, payment behaviour is generally correct and default probability acceptable.
C+
C
C-		In a very uncertain sectoral environment combined with a very vulnerable company financial situation, payment behaviour is relatively poor with default probability disquietingly high.
DIn an unfavourable sectoral environment, a deteriorated company financial situation which is at the root of generally poor payment behaviour. Default probability is high.