Advanced Corporate Credit – Warning Signals
The aim of this course is to identify the early warning signals of credit deterioration. The course covers all aspects of a company’s situation. From product to market, to financial condition; this is to identify the patterns commonly seen within corporate deterioration. The course will draw upon lessons learned from previous credit crises to determine sustainable levels of debt, the strengths and weaknesses of deal structures, and how best to respond to problems facing a corporate client. The key element of the program is to identify problems when the economy is strong. What are the characteristics of a company which will run into trouble during the next recession? A good analyst can identify the warning signals during the time of economic growth.
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Skills You
Will Gain
Uncover the early warning signs or red flags during the life span of the loan or bond: financial and non-financial and market indicators
Identify companies most susceptible to credit deterioration and the factors that will impact the likelihood of default or the need for distressed exchange of debt
Evaluate the options available to lenders or investors when signs of credit deterioration become apparent
Determine the strengths and weaknesses of an existing loan structure to improve loan structures going forward
Set the minimum level of transparency acceptable to make a responsible credit decision
Who
Should Attend
As this is an advanced course, it is most suitable for analysts with two years practical experience, or for those with a strong familiarity of financial statements. It could also be useful for those in banking and finance who have a strong understanding of macroeconomic drivers. While there is a benefit for anyone in banking in taking this course, there should be a strong understanding of corporate financial statements.
Course
Content
MODULE
Analytic Overview
Apply a structured approach to evaluate the credit standing of a company, specifically looking for signals of weakness or potential danger.
- Macroeconomic forces and concerns surrounding current issues
- Sector issues: Sectors most vulnerable to cyclicality, macroeconomic sensitivities and structural changes
- Company-specific factors: Why certain companies are more vulnerable than others to credit deterioration
- Application: Debrief of pre-read; participants come prepared with own examples of failed companies
- Symptoms of a deteriorating credit: Non-financial indicators, financial indicators, and market indicators
- Credit ratings: Credit migration
- Market pricing during turbulent times: Bond, CDS and share prices
- Application of the four-step approach to credit to expose key early warning signals: Purpose, payback, risks and structure
- Risks to repayment: Current market conditions and their impact on risk
- Application: Identify possible purposes and sources of repayment
MODULE
Themes of Distress
This section aims to identify the themes of distress. The action(s) taken by the companies and/or lenders are explored through discussion and many real-life examples of actual or potential distress. The focus is on concluding upon lessons learned to avoid future problems.
- Economic cyclicality in various markets and the potential disastrous effect on company performance
- Vulnerability to foreign exchange movements and the effect of sudden fluctuations
- Exposure to commodity price instability and the effect on profitability and cash flow
- Disruptive events that can change the outlook for the sector
- Emerging market risk and issues specific to small, young economies
- Application: The impact of the economic cycle on a variety of sectors/the impact of changing commodity prices or FX rates
MODULE
Themes of Distress (continued)
Challenged Business Models
- Lack of sufficient scale in an increasing competitive environment; weak part of the supply chain; low added value
- Excessive growth with inability to finance externally; timing of expansion
- Higher operating leverage; inability to transfer increased costs
- Dependency on a small numbers of customers and/or suppliers
- Financially impaired customers, price competition, CAPEX requirements, reliance on other sectors in distress
- Application: Changing business models and identifying red flags
- Poor management decisions and risk management
- Deficient financial disclosure or reporting
- Complex group structures and cross shareholdings
- Lack of corporate governance, control of executive management
- Failing of succession planning, management style
- Lack of integrity: Behavior, relationships, social responsibility
- Inability of shareholder to support during turbulent times
- Exercise: Assessment management strength and weaknesses and shareholder structure/support
- Illustration case study: Identify early indicators of deteriorating performance in earnings, asset management and cash flow
MODULE
Themes of Distress (continued)
Disproportionate Leverage
- Excessive leverage at the top of the economic cycle
- Debt servicing capability: Anticipating the problem
- New money needed to restructure or recapitalize
- Hidden leverage: Off balance sheet obligations
- Application: Hidden leverage and inappropriate funding structures
- Hybrid financial instruments or complex derivatives
- Debt denominated in a ‘hard currency’ while domestic currency weakens
- Illiquid debt instruments
- Structural subordination
- Application: Anticipate refinancing problems
- Illustration case study: Review the financial structure and debt instrument(s)
MODULE
Crossing the Threshold: Triggers for Action
This segment focuses on the most common events that trigger corporate distress and the need to act.
- Define and assess liquidity
- Quantify the degree of refinancing risk and the potential challenges and costs of raising new capital
- Reliance on existing ‘committed’ bank facilities or cash as the sole source of liquidity
- Characteristics of effective covenants
- Financial vs. non-financial covenants: Ability to quantify and assess the degree of protection
- Exercise: Identify alternatives when companies face refinancing problems
MODULE
Final Group Case Study
The aim of the final group case study is to allow participants to apply the framework and tools of analysis to a company in the early stages of deteriorating performance.
Upcoming
Dates
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| 08 - 10 Sep 20253 Days | Virtual Classroom | SGT | 4295 USD | |
| 10 - 12 Nov 20253 Days | In-person Classroom | London | 3895 GBP | |
| 23 - 25 Jun 20253 Days | Virtual Classroom | BST | 3295 GBP | |
| 01 - 03 Dec 20253 Days | In-person Classroom | New York | 5095 USD | |
| 22 - 24 Sep 20253 Days | Virtual Classroom | CDT | 4295 USD | |
| 03 - 05 Nov 20253 Days | In-person Classroom | Dubai | 3895 GBP |
Frequently
Asked Questions
All courses start at 9am and end at 5pm.
Our courses are designed to be both engaging and flexible, offering a mix of classroom and virtual options to accommodate different preferences. Virtual classroom courses are via Zoom. The courses range from 1 to 5 days in duration, providing an immersive learning experience that is both interactive and case study-based. This approach ensures that participants can apply practical insights to real-world scenarios. The sessions are conducted by experienced trainers who were previously industry practitioners, bringing a wealth of knowledge and firsthand expertise to the training environment.
Most delegates who attend our courses in the UK are able to claim back their VAT once it has been paid. The below information details why we need to charge VAT and how you can claim it back.
Why does Fitch Learning charge VAT?
The EU VAT Directive (Council Directive 2006/112/EC) article 53 says that for the right of entry to cultural, artistic, sporting, scientific, educational, entertainment or similar events in exchange for a ticket or payment, the place of supply is where the event physically takes place. Since, the event is held in the UK, the place of supply is the UK and therefore UK VAT has to be charged.
How can you claim back the VAT you paid for a course?
The most efficient way to claim back VAT is directly through the UK’s HM Revenue and Customs (HMRC) by completing the required forms and sending back to HMRC. Please follow the links below for further details; EU businesses Non-EU businesses
To claim back VAT or if you have any questions please contact HMRC; Telephone – 0044 (0) 3000 537 381 Email Overseas Repayment Unit – enq.oru.ni@hmrc.gsi.gov.uk.
You will receive joining instructions two weeks before the course start date, as long as we have received payment in advance of this.
Is there pre-course reading?
In order to optimize class time we ask participants to read some background information on the main illustration case(s) prior to attending the class. This also helps to ensure that all are able to participate in case discussions. In some cases additional background reading is provided. The length of pre-course reading is advised to participants in advance and typically ranges from 2-3 hours. You will need to bring a laptop or tablet to the course in order to access the course materials, as these will only be available electronically.
Can I pay via an invoice?
Yes. We will issue you an invoice, if requested at the point of booking.
When do I need to pay?
If your company is paying your invoice for you, your company will have 30 days in which to process it. If you are paying for the course yourself, you will need to pay before attendance.
What’s the accepted payment methods?
We accept bank transfers or payments via Mastercard, Visa or Amex (except Euro payments).
The EU VAT Directive (Council Directive 2006/112/EC) article 53 says that for the right of entry to cultural, artistic, sporting, scientific, educational, entertainment or similar events in exchange for a ticket or payment, the place of supply is where the event physically takes place. Based on this, we need to charge the appropriate Tax/VAT in each country we provide classroom based courses. The current rate of 20% VAT is added to courses taking place in London, 19% in Frankfurt, 9% in Singapore and 5% in Dubai. In other locations we may need to charge a sales tax although not currently for New York.
If I am unable to attend can I send a substitute?
Absolutely and it is completely free of charge. We do however ask that we have at least 2 working days’ notice of this change before the course start date. Please email enquiry@fitchlearning.com with full contact details of the substitute and who they are replacing.
Can I transfer my booked course to another date?
Yes you can. If you email us your request to transfer to the next available course date and give us more than 30 days’ notice, there will be no charge. If you notify us within 30 days of the course start date, there will be an additional payment of 25% of the course fee, provided the original course fee has been paid in full. A transfer can only be made onto a course taking place within a period of 6 months of the original course date and only one transfer can be made in respect of any booking.
Can I cancel my course booking?
If you email us with your request more than 30 days before the course start date, there will be no charge. If you notify us within 30 days of the course start date you are liable for the full course fees.
What happens if I do not attend my course?
If you do not attend your course and you do not give us any prior notice you are liable for the full course fee and no refunds can be given. Notice contact details: Email: enquiry@fitchlearning.com.
We are unable to send anything more than our standard course communication. This communication will detail the course you are attending, the location and dates, so it will provide you with all of the information you require to submit a visa application.
No, we do not typically record a public course session. The only time we will record a session, is if a delegate is receiving funding and this is a requirement of the funding provider. In these cases, the recording is only shared with the funding provider and delegates do not receive a copy.
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