{ "prompt_metadata": { "prompt_id": "Corporate_Credit_Risk_Analysis_Prompts_v2.0", "prompt_version": "2.0", "creation_date": "2025-08-17", "description": "A comprehensive, consolidated library of prompts for corporate credit risk analysis, underwriting, review, and monitoring. This library merges the best of the flat JSONL structure and the hierarchical JSON structure.", "author": "Jules" }, "report_specifications": { "report_title_template": "Corporate Credit Risk Analysis: [Subject Area]", "target_audience": "Credit Analysts, Risk Managers, Portfolio Managers, Underwriters, Investment Committees", "output_format_general": "Markdown with structured sections, adaptable to JSON or specific reporting formats.", "tone_and_style": "Formal, analytical, objective, data-driven, concise yet comprehensive." }, "core_analysis_areas": [ { "prompt_id": "foundational_scoping", "prompt_title": "Foundational & Scoping", "description": "This initial phase of any rigorous credit analysis is to establish a clear and unambiguous foundation for the work that follows. This involves defining the entity under review, selecting the analytical framework that will govern the process, and confirming the availability of sufficient information.", "prompts": [ { "task_id": "EP01", "stage_id": "foundational_scoping", "stage_name": "I. Foundational & Scoping Prompts", "section_id": "entity_profile", "section_name": "Entity Profile", "section_description": "This object gathers fundamental identification and contextual data. The purpose of the analysis is paramount, as it dictates the focus and depth required. An analysis for a new bond issuance will concentrate on the company's forward-looking capacity to service the proposed debt, whereas an annual surveillance review will focus on performance relative to previous expectations and covenants.", "prompt_text": "Provide the full legal name of the entity being analyzed, its primary ticker symbol (if public), headquarters location, and the ultimate parent entity.", "expected_response_format": "JSON object with keys: 'legal_name', 'ticker', 'hq_location', 'ultimate_parent'." }, { "task_id": "EP02", "stage_id": "foundational_scoping", "stage_name": "I. Foundational & Scoping Prompts", "section_id": "entity_profile", "section_name": "Entity Profile", "section_description": "This object gathers fundamental identification and contextual data. The purpose of the analysis is paramount, as it dictates the focus and depth required. An analysis for a new bond issuance will concentrate on the company's forward-looking capacity to service the proposed debt, whereas an annual surveillance review will focus on performance relative to previous expectations and covenants.", "prompt_text": "Clearly state the purpose and scope of this credit analysis. Is it for a new debt issuance, an annual surveillance, a management assessment, or another purpose?", "expected_response_format": "Narrative statement defining the specific goal and boundaries of the analysis." }, { "task_id": "AF01", "stage_id": "foundational_scoping", "stage_name": "I. Foundational & Scoping Prompts", "section_id": "analytical_framework_setup", "section_name": "Analytical Framework Setup", "section_description": "This object establishes the methodological 'rules of engagement.' Credit analysis adheres to structured frameworks published by rating agencies like S&P, Moody's, and Fitch. This selection governs the entire analytical process, from financial adjustments to risk factor weighting.", "prompt_text": "Select the primary credit rating agency methodology to be used for this analysis (e.g., S&P Global Ratings, Moody's, Fitch Ratings). Justify the selection.", "expected_response_format": "String value (e.g., 'S&P Global Ratings') with a brief narrative justification." }, { "task_id": "AF02", "stage_id": "foundational_scoping", "stage_name": "I. Foundational & Scoping Prompts", "section_id": "analytical_framework_setup", "section_name": "Analytical Framework Setup", "section_description": "This object establishes the methodological 'rules of engagement.' Credit analysis adheres to structured frameworks published by rating agencies like S&P, Moody's, and Fitch. This selection governs the entire analytical process, from financial adjustments to risk factor weighting.", "prompt_text": "Define the time horizon for the analysis, specifying the historical period (e.g., 2022-2024) and the forecast period (e.g., 2025-2027).", "expected_response_format": "JSON object with keys: 'historical_period_start', 'historical_period_end', 'forecast_period_start', 'forecast_period_end'." }, { "task_id": "IG01", "stage_id": "foundational_scoping", "stage_name": "I. Foundational & Scoping Prompts", "section_id": "information_gathering", "section_name": "Information Gathering", "section_description": "This object serves as a structured checklist to ensure all necessary documentation is available before substantive analysis begins. The process mirrors the initial steps taken by rating agencies, who require issuers to provide a comprehensive information package. An analysis conducted with incomplete data, such as missing debt indentures, cannot properly assess structural risks and is inherently flawed.", "prompt_text": "Confirm receipt and list the annual and interim financial statements (10-K, 10-Q, or equivalents) for the defined historical period.", "expected_response_format": "Boolean confirmation with a list of documents received." }, { "task_id": "IG02", "stage_id": "foundational_scoping", "stage_name": "I. Foundational & Scoping Prompts", "section_id": "information_gathering", "section_name": "Information Gathering", "section_description": "This object serves as a structured checklist to ensure all necessary documentation is available before substantive analysis begins. The process mirrors the initial steps taken by rating agencies, who require issuers to provide a comprehensive information package. An analysis conducted with incomplete data, such as missing debt indentures, cannot properly assess structural risks and is inherently flawed.", "prompt_text": "Confirm receipt and list key legal and financing documents, including credit agreements, bond indentures, and major lease agreements.", "expected_response_format": "Boolean confirmation with a list of documents received." }, { "task_id": "IG03", "stage_id": "foundational_scoping", "stage_name": "I. Foundational & Scoping Prompts", "section_id": "information_gathering", "section_name": "Information Gathering", "section_description": "This object serves as a structured checklist to ensure all necessary documentation is available before substantive analysis begins. The process mirrors the initial steps taken by rating agencies, who require issuers to provide a comprehensive information package. An analysis conducted with incomplete data, such as missing debt indentures, cannot properly assess structural risks and is inherently flawed.", "prompt_text": "Confirm receipt and list qualitative documents, such as investor presentations, management discussion and analysis (MD&A), and equity research reports.", "expected_response_format": "Boolean confirmation with a list of documents received." } ] }, { "prompt_id": "macro_environment_risk_assessment", "prompt_title": "Macro-Environment Risk Assessment", "description": "A company's creditworthiness cannot be assessed in a vacuum. It is fundamentally shaped by the macroeconomic, political, and industry-specific environments in which it operates. This top-down analysis is a prerequisite for understanding the external opportunities and threats facing the company.", "prompts": [ { "task_id": "SCR01", "stage_id": "macro_environment_risk", "stage_name": "II. Macro-Environment Risk Assessment", "section_id": "sovereign_and_country_risk", "section_name": "Sovereign and Country Risk", "section_description": "This analysis evaluates the risks stemming from the primary countries where the company operates, generates revenue, and holds assets. For companies with significant foreign currency debt, the sovereign's own foreign currency rating can act as a 'sovereign ceiling,' effectively capping the corporate's rating due to transfer and convertibility risks.", "prompt_text": "List the company's key countries of operation, ranked by percentage of revenue, assets, or EBITDA.", "expected_response_format": "A list of countries with corresponding percentages for revenue, assets, or EBITDA." }, { "task_id": "SCR02", "stage_id": "macro_environment_risk", "stage_name": "II. Macro-Environment Risk Assessment", "section_id": "sovereign_and_country_risk", "section_name": "Sovereign and Country Risk", "section_description": "This analysis evaluates the risks stemming from the primary countries where the company operates, generates revenue, and holds assets. For companies with significant foreign currency debt, the sovereign's own foreign currency rating can act as a 'sovereign ceiling,' effectively capping the corporate's rating due to transfer and convertibility risks.", "prompt_text": "For the top 3 key countries, assess the economic risk, including real GDP growth trends, inflation, and currency volatility. Provide the sovereign credit rating for each.", "expected_response_format": "Narrative analysis supported by macroeconomic data and sovereign ratings." }, { "task_id": "SCR03", "stage_id": "macro_environment_risk", "stage_name": "II. Macro-Environment Risk Assessment", "section_id": "sovereign_and_country_risk", "section_name": "Sovereign and Country Risk", "section_description": "This analysis evaluates the risks stemming from the primary countries where the company operates, generates revenue, and holds assets. For companies with significant foreign currency debt, the sovereign's own foreign currency rating can act as a 'sovereign ceiling,' effectively capping the corporate's rating due to transfer and convertibility risks.", "prompt_text": "For the top 3 key countries, assess the political and institutional risk, including political stability, rule of law, and institutional effectiveness.", "expected_response_format": "Qualitative narrative assessment." }, { "task_id": "SCR04", "stage_id": "macro_environment_risk", "stage_name": "II. Macro-Environment Risk Assessment", "section_id": "sovereign_and_country_risk", "section_name": "Sovereign and Country Risk", "section_description": "This analysis evaluates the risks stemming from the primary countries where the company operates, generates revenue, and holds assets. For companies with significant foreign currency debt, the sovereign's own foreign currency rating can act as a 'sovereign ceiling,' effectively capping the corporate's rating due to transfer and convertibility risks.", "prompt_text": "Assess the risk of a 'sovereign ceiling' impacting the company's rating due to transfer and convertibility (T&C) risk. Does the company have significant foreign currency debt issued from a country with a low sovereign rating?", "expected_response_format": "Narrative assessment concluding with a statement on the level of sovereign ceiling risk (e.g., Low, Moderate, High)." }, { "task_id": "IR01", "stage_id": "macro_environment_risk", "stage_name": "II. Macro-Environment Risk Assessment", "section_id": "industry_risk_analysis", "section_name": "Industry Risk Analysis", "section_description": "This section evaluates the dynamics of the industry in which the company competes. The analysis must identify systemic risks and opportunities that affect all participants, such as cyclicality, competitive intensity, and long-term growth prospects. A critical modern component is the assessment of industry-wide Environmental, Social, and Governance (ESG) risks.", "prompt_text": "Define the company's primary industry and any significant sub-industries.", "expected_response_format": "String identifying the primary industry (e.g., 'Global Automotive Manufacturing')." }, { "task_id": "IR02", "stage_id": "macro_environment_risk", "stage_name": "II. Macro-Environment Risk Assessment", "section_id": "industry_risk_analysis", "section_name": "Industry Risk Analysis", "section_description": "This section evaluates the dynamics of the industry in which the company competes. The analysis must identify systemic risks and opportunities that affect all participants, such as cyclicality, competitive intensity, and long-term growth prospects. A critical modern component is the assessment of industry-wide Environmental, Social, and Governance (ESG) risks.", "prompt_text": "Analyze the industry's cyclicality, competitive intensity, and barriers to entry. How do these factors influence profitability and risk for participants?", "expected_response_format": "Narrative analysis covering cyclicality, competition, and barriers to entry." }, { "task_id": "IR03", "stage_id": "macro_environment_risk", "stage_name": "II. Macro-Environment Risk Assessment", "section_id": "industry_risk_analysis", "section_name": "Industry Risk Analysis", "section_description": "This section evaluates the dynamics of the industry in which the company competes. The analysis must identify systemic risks and opportunities that affect all participants, such as cyclicality, competitive intensity, and long-term growth prospects. A critical modern component is the assessment of industry-wide Environmental, Social, and Governance (ESG) risks.", "prompt_text": "Assess the industry's long-term growth prospects and key drivers. Is the industry mature, in decline, or experiencing high growth? What are the primary demand drivers?", "expected_response_format": "Narrative analysis supported by industry growth data." }, { "task_id": "IR04", "stage_id": "macro_environment_risk", "stage_name": "II. Macro-Environment Risk Assessment", "section_id": "industry_risk_analysis", "section_name": "Industry Risk Analysis", "section_description": "This section evaluates the dynamics of the industry in which the company competes. The analysis must identify systemic risks and opportunities that affect all participants, such as cyclicality, competitive intensity, and long-term growth prospects. A critical modern component is the assessment of industry-wide Environmental, Social, and Governance (ESG) risks.", "prompt_text": "Identify the top 3 systemic ESG-related risks and opportunities for this industry (e.g., carbon transition, water scarcity, data privacy, supply chain labor standards). Explain how these factors could impact the industry's long-term risk profile and profitability.", "expected_response_format": "Narrative identifying and explaining the impact of key industry-level ESG factors." }, { "task_id": "IR05", "stage_id": "macro_environment_risk", "stage_name": "II. Macro-Environment Risk Assessment", "section_id": "industry_risk_analysis", "section_name": "Industry Risk Analysis", "section_description": "This section evaluates the dynamics of the industry in which the company competes. The analysis must identify systemic risks and opportunities that affect all participants, such as cyclicality, competitive intensity, and long-term growth prospects. A critical modern component is the assessment of industry-wide Environmental, Social, and Governance (ESG) risks.", "prompt_text": "Synthesize the country and industry risk assessments to determine a combined Corporate Industry and Country Risk Assessment (CICRA) score, following the selected rating agency's methodology. Justify how the interaction between country and industry factors exacerbates or mitigates overall risk.", "expected_response_format": "A single risk score (e.g., 1-Very Low Risk to 6-Very High Risk) with a detailed justification narrative.[11]" } ] }, { "prompt_id": "business_risk_profile_assessment", "prompt_title": "Business Risk Profile Assessment", "description": "This section transitions from the external environment to the company's specific operational characteristics and strategic positioning. The Business Risk Profile assesses the durability and strength of the company's franchise within its industry context.", "prompts": [ { "task_id": "CP01", "stage_id": "business_risk_profile", "stage_name": "III. Business Risk Profile Assessment", "section_id": "competitive_position", "section_name": "Competitive Position", "section_description": "This evaluates the company's market standing and the sustainability of its competitive advantages. A dominant market share, protected by high barriers to entry, is a significant credit strength. Conversely, high customer or geographic concentration is a key vulnerability.", "prompt_text": "Assess the company's market share and competitive rank in its primary product lines and geographic markets. Is its position strengthening, stable, or eroding over time? Provide supporting data.", "expected_response_format": "Narrative analysis with market share data and trends." }, { "task_id": "CP02", "stage_id": "business_risk_profile", "stage_name": "III. Business Risk Profile Assessment", "section_id": "competitive_position", "section_name": "Competitive Position", "section_description": "This evaluates the company's market standing and the sustainability of its competitive advantages. A dominant market share, protected by high barriers to entry, is a significant credit strength. Conversely, high customer or geographic concentration is a key vulnerability.", "prompt_text": "Analyze the company's diversification across products/services, geographies, and customers. Is there significant concentration risk in any of these areas? Quantify where possible (e.g., '% of revenue from top customer').", "expected_response_format": "Narrative analysis with supporting diversification metrics." }, { "task_id": "CP03", "stage_id": "business_risk_profile", "stage_name": "III. Business Risk Profile Assessment", "section_id": "competitive_position", "section_name": "Competitive Position", "section_description": "This evaluates the company's market standing and the sustainability of its competitive advantages. A dominant market share, protected by high barriers to entry, is a significant credit strength. Conversely, high customer or geographic concentration is a key vulnerability.", "prompt_text": "Identify and evaluate the company's key competitive advantages (e.g., brand strength, proprietary technology, cost leadership, network effects, barriers to entry). How durable are these advantages?", "expected_response_format": "Qualitative assessment of competitive advantages with justification." }, { "task_id": "OEP01", "stage_id": "business_risk_profile", "stage_name": "III. Business Risk Profile Assessment", "section_id": "operational_efficiency_and_profitability", "section_name": "Operational Efficiency and Profitability", "section_description": "This examines the company's ability to generate profits and cash flow. A crucial distinction is made between the absolute level of profitability and its volatility. Two companies may have the same average EBITDA margin over a five-year period, but the one with lower margin volatility is considered a better credit risk because its cash flows are more predictable and reliable for servicing debt through an economic cycle.", "prompt_text": "Analyze the historical trend and level of the company's key profitability metrics (e.g., EBITDA margin, EBIT margin) over the defined historical period.", "expected_response_format": "Narrative analysis supported by a table of historical profitability ratios." }, { "task_id": "OEP02", "stage_id": "business_risk_profile", "stage_name": "III. Business Risk Profile Assessment", "section_id": "operational_efficiency_and_profitability", "section_name": "Operational Efficiency and Profitability", "section_description": "This examines the company's ability to generate profits and cash flow. A crucial distinction is made between the absolute level of profitability and its volatility. Two companies may have the same average EBITDA margin over a five-year period, but the one with lower margin volatility is considered a better credit risk because its cash flows are more predictable and reliable for servicing debt through an economic cycle.", "prompt_text": "Assess the volatility of the company's profitability. Calculate the standard deviation or coefficient of variation of the EBITDA margin over the historical period and compare it to peers.", "expected_response_format": "A quantitative measure of volatility with a narrative explaining its credit implications." }, { "task_id": "OEP03", "stage_id": "business_risk_profile", "stage_name": "III. Business Risk Profile Assessment", "section_id": "operational_efficiency_and_profitability", "section_name": "Operational Efficiency and Profitability", "section_description": "This examines the company's ability to generate profits and cash flow. A crucial distinction is made between the absolute level of profitability and its volatility. Two companies may have the same average EBITDA margin over a five-year period, but the one with lower margin volatility is considered a better credit risk because its cash flows are more predictable and reliable for servicing debt through an economic cycle.", "prompt_text": "Evaluate the company's cost structure and operating efficiency. Is there evidence of a durable cost advantage? How does its efficiency compare to peers?", "expected_response_format": "Qualitative assessment of the cost structure with supporting evidence." }, { "task_id": "MG01", "stage_id": "business_risk_profile", "stage_name": "III. Business Risk Profile Assessment", "section_id": "management_and_governance", "section_name": "Management and Governance", "section_description": "This qualitative assessment evaluates the competence, strategy, and risk appetite of the management team, as well as the robustness of corporate governance structures. Management's financial policy is a critical indicator of future financial risk and demonstrates the link between business strategy and balance sheet management. Weak governance or a history of poor strategic execution are significant credit concerns.", "prompt_text": "Evaluate management's strategic competence and operational track record. Has management successfully executed on past strategic initiatives?", "expected_response_format": "Narrative assessment of management's strategy and historical performance." }, { "task_id": "MG02", "stage_id": "business_risk_profile", "stage_name": "III. Business Risk Profile Assessment", "section_id": "management_and_governance", "section_name": "Management and Governance", "section_description": "This qualitative assessment evaluates the competence, strategy, and risk appetite of the management team, as well as the robustness of corporate governance structures. Management's financial policy is a critical indicator of future financial risk and demonstrates the link between business strategy and balance sheet management. Weak governance or a history of poor strategic execution are significant credit concerns.", "prompt_text": "Assess management's risk appetite and financial policy. Is the financial policy viewed as conservative, moderate, or aggressive? Are shareholder returns consistently prioritized over creditor interests?", "expected_response_format": "Narrative assessment of financial policy, concluding with a characterization (e.g., 'Aggressive')." }, { "task_id": "MG03", "stage_id": "business_risk_profile", "stage_name": "III. Business Risk Profile Assessment", "section_id": "management_and_governance", "section_name": "Management and Governance", "section_description": "This qualitative assessment evaluates the competence, strategy, and risk appetite of the management team, as well as the robustness of corporate governance structures. Management's financial policy is a critical indicator of future financial risk and demonstrates the link between business strategy and balance sheet management. Weak governance or a history of poor strategic execution are significant credit concerns.", "prompt_text": "Evaluate the quality and robustness of corporate governance. Consider board independence, transparency of financial reporting, and any history of related-party transactions or regulatory issues.", "expected_response_format": "Qualitative assessment of governance structures and practices." }, { "task_id": "GOS01", "stage_id": "business_risk_profile", "stage_name": "III. Business Risk Profile Assessment", "section_id": "group_and_ownership_structure", "section_name": "Group and Ownership Structure", "section_description": "This analysis considers the influence of the company's parent or controlling shareholders. A subsidiary's rating can be positively influenced by a strong parent or negatively impacted by a weak parent that may extract resources. The analysis must consider specific methodologies for group structures and government-related entities (GREs).", "prompt_text": "Identify the company's parent entity or key controlling shareholders. Describe the ownership structure.", "expected_response_format": "Narrative description of the ownership structure." }, { "task_id": "GOS02", "stage_id": "business_risk_profile", "stage_name": "III. Business Risk Profile Assessment", "section_id": "group_and_ownership_structure", "section_name": "Group and Ownership Structure", "section_description": "This analysis considers the influence of the company's parent or controlling shareholders. A subsidiary's rating can be positively influenced by a strong parent or negatively impacted by a weak parent that may extract resources. The analysis must consider specific methodologies for group structures and government-related entities (GREs).", "prompt_text": "Assess the potential for positive or negative intervention from the parent/controlling shareholder. Consider the parent's credit quality, strategic importance of the subsidiary, and any history of support or resource extraction.", "expected_response_format": "Narrative assessment concluding on the likely direction and strength of group influence." }, { "task_id": "GOS03", "stage_id": "business_risk_profile", "stage_name": "III. Business Risk Profile Assessment", "section_id": "group_and_ownership_structure", "section_name": "Group and Ownership Structure", "section_description": "This analysis considers the influence of the company's parent or controlling shareholders. A subsidiary's rating can be positively influenced by a strong parent or negatively impacted by a weak parent that may extract resources. The analysis must consider specific methodologies for group structures and government-related entities (GREs).", "prompt_text": "If the company is a Government-Related Entity (GRE), assess the likelihood of extraordinary government support based on the relevant rating agency methodology.", "expected_response_format": "Narrative analysis applying the GRE framework, concluding on the likelihood of support." } ] }, { "prompt_id": "financial_risk_profile_assessment", "prompt_title": "Financial Risk Profile Assessment", "description": "This section forms the quantitative core of the credit analysis, focusing on the company's balance sheet strength, cash flow generation, and overall financial policies.", "prompts": [ { "task_id": "FSA01", "stage_id": "financial_risk_profile", "stage_name": "IV. Financial Risk Profile Assessment", "section_id": "financial_statement_adjustments", "section_name": "Financial Statement Adjustments", "section_description": "This is the most critical step in quantitative analysis. Standard adjustments for items like operating leases and pension deficits create an analytically 'clean' set of financials that provide a more accurate picture of a company's leverage and obligations.", "prompt_text": "Calculate the present value of operating lease commitments and add the result to reported debt to arrive at lease-adjusted debt. Add lease-related interest back to reported EBITDA.", "expected_response_format": "Table showing reported debt, lease adjustment, and lease-adjusted debt. Separate calculation for adjusted EBITDA." }, { "task_id": "FSA02", "stage_id": "financial_risk_profile", "stage_name": "IV. Financial Risk Profile Assessment", "section_id": "financial_statement_adjustments", "section_name": "Financial Statement Adjustments", "section_description": "This is the most critical step in quantitative analysis. Standard adjustments for items like operating leases and pension deficits create an analytically 'clean' set of financials that provide a more accurate picture of a company's leverage and obligations.", "prompt_text": "Calculate the after-tax pension and Other Post-Employment Benefit (OPEB) deficits and add them to reported debt.", "expected_response_format": "Table showing reported debt, pension/OPEB adjustment, and resulting adjusted debt." }, { "task_id": "FSA03", "stage_id": "financial_risk_profile", "stage_name": "IV. Financial Risk Profile Assessment", "section_id": "financial_statement_adjustments", "section_name": "Financial Statement Adjustments", "section_description": "This is the most critical step in quantitative analysis. Standard adjustments for items like operating leases and pension deficits create an analytically 'clean' set of financials that provide a more accurate picture of a company's leverage and obligations.", "prompt_text": "Identify and quantify any material non-recurring items (e.g., restructuring costs, asset sale gains) from the historical period. Adjust reported EBITDA to reflect a normalized, ongoing earnings capacity.", "expected_response_format": "Table listing non-recurring items and their impact on reported EBITDA to arrive at adjusted EBITDA." }, { "task_id": "HFA01", "stage_id": "financial_risk_profile", "stage_name": "IV. Financial Risk Profile Assessment", "section_id": "historical_financial_analysis", "section_name": "Historical Financial Analysis", "section_description": "This involves calculating and interpreting key credit ratios over the historical period using the adjusted financial figures. The focus is on leverage, coverage, and cash flow metrics, which are central to assessing debt repayment capacity.", "prompt_text": "Using the fully adjusted financials, calculate key leverage ratios (e.g., Adjusted Debt / Adjusted EBITDA, Adjusted FFO / Adjusted Debt) for the defined historical period.", "expected_response_format": "Table of historical leverage ratios." }, { "task_id": "HFA02", "stage_id": "financial_risk_profile", "stage_name": "IV. Financial Risk Profile Assessment", "section_id": "historical_financial_analysis", "section_name": "Historical Financial Analysis", "section_description": "This involves calculating and interpreting key credit ratios over the historical period using the adjusted financial figures. The focus is on leverage, coverage, and cash flow metrics, which are central to assessing debt repayment capacity.", "prompt_text": "Using the fully adjusted financials, calculate key coverage ratios (e.g., Adjusted EBITDA / Adjusted Interest Expense) for the defined historical period.", "expected_response_format": "Table of historical coverage ratios." }, { "task_id": "HFA03", "stage_id": "financial_risk_profile", "stage_name": "IV. Financial Risk Profile Assessment", "section_id": "historical_financial_analysis", "section_name": "Historical Financial Analysis", "section_description": "This involves calculating and interpreting key credit ratios over the historical period using the adjusted financial figures. The focus is on leverage, coverage, and cash flow metrics, which are central to assessing debt repayment capacity.", "prompt_text": "Analyze the historical trends in the calculated credit ratios. Explain the key drivers of any significant improvement or deterioration.", "expected_response_format": "Narrative analysis explaining the trends observed in the historical credit metrics." }, { "task_id": "CFA01", "stage_id": "financial_risk_profile", "stage_name": "IV. Financial Risk Profile Assessment", "section_id": "cash_flow_analysis", "section_name": "Cash Flow Analysis", "section_description": "A deeper dive into the composition, quality, and sustainability of a company's cash flow, which is often considered the single most important consideration in credit analysis. This includes analyzing working capital trends and the cash conversion cycle.", "prompt_text": "Analyze the quality and composition of Cash Flow from Operations (CFO). How much is driven by non-cash charges versus core earnings? Is it volatile?", "expected_response_format": "Narrative analysis of CFO quality and stability." }, { "task_id": "CFA02", "stage_id": "financial_risk_profile", "stage_name": "IV. Financial Risk Profile Assessment", "section_id": "cash_flow_analysis", "section_name": "Cash Flow Analysis", "section_description": "A deeper dive into the composition, quality, and sustainability of a company's cash flow, which is often considered the single most important consideration in credit analysis. This includes analyzing working capital trends and the cash conversion cycle.", "prompt_text": "Analyze historical working capital trends. Is the company experiencing a consistent cash drain or benefit from working capital changes? What does this imply about operational management?", "expected_response_format": "Narrative analysis supported by a table of historical working capital movements." }, { "task_id": "CFA03", "stage_id": "financial_risk_profile", "stage_name": "IV. Financial Risk Profile Assessment", "section_id": "cash_flow_analysis", "section_name": "Cash Flow Analysis", "section_description": "A deeper dive into the composition, quality, and sustainability of a company's cash flow, which is often considered the single most important consideration in credit analysis. This includes analyzing working capital trends and the cash conversion cycle.", "prompt_text": "Calculate historical Free Operating Cash Flow (FOCF) and Discretionary Cash Flow (DCF). Assess the company's ability to generate cash after capital expenditures and dividends.", "expected_response_format": "Table showing historical calculation of FOCF and DCF with a narrative assessment." }, { "task_id": "FFS01", "stage_id": "financial_risk_profile", "stage_name": "IV. Financial Risk Profile Assessment", "section_id": "financial_forecasting_and_stress_testing", "section_name": "Financial Forecasting and Stress Testing", "section_description": "Credit ratings are inherently forward-looking opinions. This section moves from historical analysis to projecting future performance. A critical concept here is the development of a 'rating case' forecast. This is distinct from a company's often-optimistic 'management case.' The rating case incorporates more conservative assumptions about growth and profitability to assess debt service capacity 'through the cycle'.", "prompt_text": "Develop a 'rating case' financial forecast for the defined forecast period. Clearly state the key assumptions for revenue growth, profitability margins, and capital expenditures. These assumptions should be more conservative than management's public guidance.", "expected_response_format": "A full projected financial statement model (IS, BS, CF) with a separate table listing and justifying key assumptions." }, { "task_id": "FFS02", "stage_id": "financial_risk_profile", "stage_name": "IV. Financial Risk Profile Assessment", "section_id": "financial_forecasting_and_stress_testing", "section_name": "Financial Forecasting and Stress Testing", "section_description": "Credit ratings are inherently forward-looking opinions. This section moves from historical analysis to projecting future performance. A critical concept here is the development of a 'rating case' forecast. This is distinct from a company's often-optimistic 'management case.' The rating case incorporates more conservative assumptions about growth and profitability to assess debt service capacity 'through the cycle'.", "prompt_text": "Define and apply a 'downside stress test' scenario to the rating case forecast. This should model a plausible negative event (e.g., recession, sharp input cost increase). State the stress assumptions clearly.", "expected_response_format": "A second set of projected financial statements under the stress scenario, with assumptions clearly defined." }, { "task_id": "FFS03", "stage_id": "financial_risk_profile", "stage_name": "IV. Financial Risk Profile Assessment", "section_id": "financial_forecasting_and_stress_testing", "section_name": "Financial Forecasting and Stress Testing", "section_description": "Credit ratings are inherently forward-looking opinions. This section moves from historical analysis to projecting future performance. A critical concept here is the development of a 'rating case' forecast. This is distinct from a company's often-optimistic 'management case.' The rating case incorporates more conservative assumptions about growth and profitability to assess debt service capacity 'through the cycle'.", "prompt_text": "Analyze the trajectory of key credit metrics (leverage, coverage) under both the rating case and the downside stress test. How resilient is the company's financial profile?", "expected_response_format": "Table comparing projected credit metrics under both scenarios, with a narrative discussing financial resilience." }, { "task_id": "FFL01", "stage_id": "financial_risk_profile", "stage_name": "IV. Financial Risk Profile Assessment", "section_id": "financial_flexibility_and_liquidity", "section_name": "Financial Flexibility and Liquidity", "section_description": "This assesses the company's ability to meet near-term obligations and manage unexpected cash shortfalls. It involves analyzing the debt maturity profile, available liquidity sources, and covenant headroom under credit facilities. A potential covenant breach is a significant credit event that can trigger defaults.", "prompt_text": "Analyze the company's near-term liquidity position. Calculate sources (cash, FFO, available credit lines) versus uses (short-term debt, working capital needs, capex, dividends) over the next 12-24 months.", "expected_response_format": "A sources and uses of liquidity table with a concluding statement on the adequacy of the liquidity position (e.g., Strong, Adequate, Weak)." }, { "task_id": "FFL02", "stage_id": "financial_risk_profile", "stage_name": "IV. Financial Risk Profile Assessment", "section_id": "financial_flexibility_and_liquidity", "section_name": "Financial Flexibility and Liquidity", "section_description": "This assesses the company's ability to meet near-term obligations and manage unexpected cash shortfalls. It involves analyzing the debt maturity profile, available liquidity sources, and covenant headroom under credit facilities. A potential covenant breach is a significant credit event that can trigger defaults.", "prompt_text": "Provide a schedule of the company's debt maturities for the next 5 years and beyond. Are there any large, upcoming maturity towers that pose a refinancing risk?", "expected_response_format": "A table of debt maturities by year, with a narrative assessment of refinancing risk." }, { "task_id": "FFL03", "stage_id": "financial_risk_profile", "stage_name": "IV. Financial Risk Profile Assessment", "section_id": "financial_flexibility_and_liquidity", "section_name": "Financial Flexibility and Liquidity", "description": "This assesses the company's ability to meet near-term obligations and manage unexpected cash shortfalls. It involves analyzing the debt maturity profile, available liquidity sources, and covenant headroom under credit facilities. A potential covenant breach is a significant credit event that can trigger defaults.", "prompt_text": "Identify the key financial covenants in the company's main credit facilities. Calculate the current and projected covenant headroom under the rating case and stress case forecasts.", "expected_response_format": "Table listing key covenants, their required levels, and the calculated headroom (in %) under both forecast scenarios." } ] }, { "prompt_id": "synthesis_rating_reporting", "prompt_title": "Synthesis, Rating, and Reporting", "description": "The final stage of the analysis involves integrating all prior findings, benchmarking the company against peers, and arriving at a defensible credit rating recommendation.", "prompts": [ { "task_id": "PA01", "stage_id": "synthesis_rating_reporting", "stage_name": "V. Synthesis, Rating, and Reporting", "section_id": "peer_analysis", "section_name": "Peer Analysis", "section_description": "A company's credit metrics are only meaningful when placed in the context of its peers. This systematic comparison helps to normalize for industry-specific characteristics and highlights areas of relative strength or weakness.", "prompt_text": "Identify a group of 3-5 publicly rated peer companies. Justify their selection based on business mix, scale, and geography.", "expected_response_format": "List of peer companies with their credit ratings and a brief justification for their inclusion." }, { "task_id": "PA02", "stage_id": "synthesis_rating_reporting", "stage_name": "V. Synthesis, Rating, and Reporting", "section_id": "peer_analysis", "section_name": "Peer Analysis", "section_description": "A company's credit metrics are only meaningful when placed in the context of its peers. This systematic comparison helps to normalize for industry-specific characteristics and highlights areas of relative strength or weakness.", "prompt_text": "Create a table comparing the subject company's business risk profile (market position, diversification, profitability) against the selected peers.", "expected_response_format": "Table with qualitative comparisons (e.g., 'Stronger', 'In-line', 'Weaker') for key business risk factors across the peer group." }, { "task_id": "PA03", "stage_id": "synthesis_rating_reporting", "stage_name": "V. Synthesis, Rating, and Reporting", "section_id": "peer_analysis", "section_name": "Peer Analysis", "section_description": "A company's credit metrics are only meaningful when placed in the context of its peers. This systematic comparison helps to normalize for industry-specific characteristics and highlights areas of relative strength or weakness.", "prompt_text": "Create a table comparing the subject company's key historical and projected financial metrics (leverage, coverage) against the selected peers.", "expected_response_format": "Table with quantitative credit metrics for the subject company and its peers." }, { "task_id": "RPS01", "stage_id": "synthesis_rating_reporting", "stage_name": "V. Synthesis, Rating, and Reporting", "section_id": "risk_profile_synthesis", "section_name": "Risk Profile Synthesis", "section_description": "This is where the two main pillars of the analysis—Business Risk and Financial Risk—are formally combined to derive an initial, or 'anchor,' credit assessment.", "prompt_text": "Based on the preceding analysis (competitive position, diversification, profitability), synthesize and assign a single Business Risk Profile assessment (e.g., Excellent, Strong, Satisfactory, Fair, Weak, Vulnerable). Justify the assessment.", "expected_response_format": "A single adjectival score with a detailed justification narrative." }, { "task_id": "RPS02", "stage_id": "synthesis_rating_reporting", "stage_name": "V. Synthesis, Rating, and Reporting", "section_id": "risk_profile_synthesis", "section_name": "Risk Profile Synthesis", "section_description": "This is where the two main pillars of the analysis—Business Risk and Financial Risk—are formally combined to derive an initial, or 'anchor,' credit assessment.", "prompt_text": "Based on the preceding analysis (historical and projected financial metrics), synthesize and assign a single Financial Risk Profile assessment (e.g., Minimal, Modest, Intermediate, Significant, Aggressive, Highly Leveraged). Justify the assessment.", "expected_response_format": "A single adjectival score with a detailed justification narrative." }, { "task_id": "RPS03", "stage_id": "synthesis_rating_reporting", "stage_name": "V. Synthesis, Rating, and Reporting", "section_id": "risk_profile_synthesis", "section_name": "Risk Profile Synthesis", "section_description": "This is where the two main pillars of the analysis—Business Risk and Financial Risk—are formally combined to derive an initial, or 'anchor,' credit assessment.", "prompt_text": "Using the selected rating agency's Business Risk / Financial Risk matrix, combine the two profile assessments to determine the 'anchor' credit rating.", "expected_response_format": "A single rating category (e.g., 'bbb', 'bb+') derived from the matrix." }, { "task_id": "MFN01", "stage_id": "synthesis_rating_reporting", "stage_name": "V. Synthesis, Rating, and Reporting", "section_id": "modifying_factors_and_notching", "section_name": "Modifying Factors and Notching", "section_description": "The anchor rating is adjusted for other material factors. A particularly strong or weak liquidity profile can warrant an adjustment. For specific debt instruments, recovery analysis determines whether the instrument rating should be at, above, or below the issuer's overall credit rating based on its security and seniority in the capital structure.", "prompt_text": "Assess the company's liquidity profile as a potential modifying factor. Does the liquidity position (Strong, Adequate, Weak) warrant a notch up or down from the anchor rating?", "expected_response_format": "Narrative assessment concluding with a notching decision (e.g., '+1 notch', 'no adjustment', '-1 notch')." }, { "task_id": "MFN02", "stage_id": "synthesis_rating_reporting", "stage_name": "V. Synthesis, Rating, and Reporting", "section_id": "modifying_factors_and_notching", "section_name": "Modifying Factors and Notching", "section_description": "The anchor rating is adjusted for other material factors. A particularly strong or weak liquidity profile can warrant an adjustment. For specific debt instruments, recovery analysis determines whether the instrument rating should be at, above, or below the issuer's overall credit rating based on its security and seniority in the capital structure.", "prompt_text": "Assess other potential modifiers, such as financial policy, governance, or group support. Justify any further notching adjustments to the anchor rating.", "expected_response_format": "Narrative assessment of any other modifiers and their impact on the rating." }, { "task_id": "MFN03", "stage_id": "synthesis_rating_reporting", "stage_name": "V. Synthesis, Rating, and Reporting", "section_id": "modifying_factors_and_notching", "section_name": "Modifying Factors and Notching", "section_description": "The anchor rating is adjusted for other material factors. A particularly strong or weak liquidity profile can warrant an adjustment. For specific debt instruments, recovery analysis determines whether the instrument rating should be at, above, or below the issuer's overall credit rating based on its security and seniority in the capital structure.", "prompt_text": "For a specific debt instrument, conduct a recovery analysis to determine if its rating should be notched up or down from the final Issuer Credit Rating based on its collateral and seniority.", "expected_response_format": "A recovery rating (e.g., '1+', '3', '5') and a corresponding instrument rating." }, { "task_id": "RR01", "stage_id": "synthesis_rating_reporting", "stage_name": "V. Synthesis, Rating, and Reporting", "section_id": "rating_recommendation", "section_name": "Rating Recommendation", "section_description": "This is the final, actionable output. It includes the recommended rating, a forward-looking outlook, and a concise rationale. The outlook (Stable, Positive, Negative) is a critical component, communicating the likely direction of the rating over the next 12-24 months and is based on the potential for identified risks or opportunities to materialize.", "prompt_text": "State the final recommended Issuer Credit Rating (ICR) after all adjustments.", "expected_response_format": "A final credit rating (e.g., 'BBB-')." }, { "task_id": "RR02", "stage_id": "synthesis_rating_reporting", "stage_name": "V. Synthesis, Rating, and Reporting", "section_id": "rating_recommendation", "section_name": "Rating Recommendation", "section_description": "This is the final, actionable output. It includes the recommended rating, a forward-looking outlook, and a concise rationale. The outlook (Stable, Positive, Negative) is a critical component, communicating the likely direction of the rating over the next 12-24 months and is based on the potential for identified risks or opportunities to materialize.", "prompt_text": "Assign a rating outlook (e.g., Stable, Positive, Negative, Developing). Justify the outlook based on the potential for specific risks or opportunities to materialize over the next 12-24 months.", "expected_response_format": "A rating outlook with a brief justification." }, { "task_id": "RR03", "stage_id": "synthesis_rating_reporting", "stage_name": "V. Synthesis, Rating, and Reporting", "section_id": "rating_recommendation", "section_name": "Rating Recommendation", "section_description": "This is the final, actionable output. It includes the recommended rating, a forward-looking outlook, and a concise rationale. The outlook (Stable, Positive, Negative) is a critical component, communicating the likely direction of the rating over the next 12-24 months and is based on the potential for identified risks or opportunities to materialize.", "prompt_text": "Write a concise rating rationale (2-3 paragraphs) summarizing the key credit strengths and weaknesses that support the final rating and outlook.", "expected_response_format": "A well-structured narrative summarizing the core credit story." }, { "task_id": "CRG01", "stage_id": "synthesis_rating_reporting", "stage_name": "V. Synthesis, Rating, and Reporting", "section_id": "credit_report_generation", "section_name": "Credit Report Generation", "section_description": "This final object provides prompts to assemble the full narrative report from the preceding analytical components, ensuring a professional and comprehensive final deliverable consistent with industry standards.", "prompt_text": "Assemble an executive summary that includes the final rating recommendation, outlook, and a high-level overview of the business and financial risk profiles and key credit considerations.", "expected_response_format": "A 1-page executive summary narrative." }, { "task_id": "CRG02", "stage_id": "synthesis_rating_reporting", "stage_name": "V. Synthesis, Rating, and Reporting", "section_id": "credit_report_generation", "section_name": "Credit Report Generation", "section_description": "This final object provides prompts to assemble the full narrative report from the preceding analytical components, ensuring a professional and comprehensive final deliverable consistent with industry standards.", "prompt_text": "Compile the full, detailed credit report by sequencing the narrative outputs from all preceding analytical sections in a logical, professional format.", "expected_response_format": "A single, comprehensive document containing the full analysis." } ] } ] }