Guest Speakers - Mr. Ichiro Miyake & Mr. Takenari Yamamoto, S&P Global Ratings Japan
On January 23, 2017, Professor Tomonori Ito's Corporate Finance class welcomed Mr. Ichiro Miyake, President and Representative Director of S&P Global Ratings Japan, and Mr. Takenari Yamamoto, Executive Officer and Chief Operating Officer, as guest speakers.
Following greetings, Mr. Miyake spent about 20 minutes to introduce the ratings services of Standard and Poor's, describing the organization, its mission and its core values. He described how credit ratings can be utilized by all potential uses, emphasizing the value added that can be provided by a strict and fair evaluation of creditworthiness. He also explained credit ratings assigned to hybrid securities, which has become popular recently.
After Mr. Miyake's presentation, Mr. Yamamoto presented the details of the rating methodology for another 45 minutes. He explained the meaning of credit ratings, the default rates according to different rating classes, and how credit ratings are assigned to corporates. He described how business risk profile and financial risk profile is utilized in assigning credit ratings, and explained what financial ratios are examined at by the rating agencies. He closed his presentation by disclosing the fact that single B is the credit rating assigned to the largest number of global companies, but in Japan it is single A.
It has been a pleasure to receive Mr. Miyake and Mr. Yamamoto at Hitotsubashi ICS. Their insightful thoughts on how to judge the creditworthiness of an organization and how to use credit ratings were quite useful and full of learning.