S&P Valuation and Risk Strategies Develops New Benchmark Scoring Methodology to Evaluate Corporate Bonds

NEW YORK, Aug. 2 /PRNewswire/ -- S&P Valuation and Risk Strategies, an independent and analytically separate business unit within Standard & Poor's that provides users with market intelligence and analytic insight for risk-driven investment analysis, announced the launch of a new evaluation benchmark on S&P's Global Credit Portal investor analytics platform.  The new Risk-to-Price scoring methodology is intended to help corporate bond investors determine how well they are being compensated, through yield, for the risks they are taking.

Risk-to-Price incorporates cross-asset aspects of a corporate bond into ranking securities on a relative basis, intending to capture both credit and market risk. The Risk-to-Price methodology models the behavior of option-adjusted spreads in conjunction with the probability of default and the volatility of the bond. The result is a unique, cross-asset analytic for corporate bonds. The higher the Risk-to-Price score, the better the securities are projected to compensate their owners relative to underlying market and credit risks.

This scoring system allows the Risk-to-Price universe of corporate bonds to be segmented into quartiles by region, with the higher scores designated "Quartile 1" and the lowest scores designated "Quartile 4." Debt issues scored in Quartile 1 are projected to offer investors the best yield for the amount of default and market risk they are taking. The offering scores approximately 6,000 U.S. and European debt issues. In addition to the daily scores, commentary is published as the R2P team observes anomalies across the corporate credit space, to give perspective on these securities.

"The Risk-to-Price score allows fixed income investors to gain a more granular perspective than ever before on how well they are being compensated for the risks they are exposed to in their portfolios," said Michael Thompson, managing director, S&P Valuation and Risk Strategies.  "We developed the methodology in direct response to the credit crisis to give investors a common vocabulary for communicating and understanding market and credit risk components of their holdings; we believe it will soon become a standard benchmark in the credit evaluation process."

A Risk-to-Price analytics solution is now available to Standard & Poor's customers globally through the S&P Global Credit Portal. For more information on Risk-to-Price, please visit: www.standardandpoors.com/R2P (Link to: Bob Keiser Video)

About S&P Valuation and Risk Strategies

S&P Valuation and Risk Strategies delivers a portfolio of products and services to institutional investors that serve the global financial markets by providing market intelligence and analytic insight for risk driven investment analysis, including for the debt, structured finance, derivative and credit markets. S&P Valuation and Risk Strategies is analytically and editorially independent from any other analytical group at Standard & Poor's, including Standard & Poor's Ratings Services.  The unit has no access to non- public information received by other units of Standard & Poor's. Standard & Poor's does not trade on its own account. 

About Standard & Poor's

Standard & Poor's Financial Services LLC, a subsidiary of The McGraw-Hill Companies (NYSE: MHP), is the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research and data. With offices in 23 countries and markets, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for 150 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit www.standardandpoors.com.

About Standard & Poor's Securities Evaluations

Standard & Poor's Securities Evaluations, Inc. (SPSE), a wholly owned subsidiary of The McGraw-Hill Companies, Inc., is a part of S&P Valuation and Risk Strategies and a registered investment adviser with the United States Securities and Exchange Commission.  SPSE provides (1) fixed-income evaluations and (2) analyses of certain U.S. and European fixed income securities using its proprietary Risk-to-Price scoring methodology.  SPSE is analytically and editorially independent from any other analytical group at Standard & Poor's.  Products and services provided by SPSE may not be available in all countries or jurisdictions.

Analytic services and products provided by Standard & Poor's are the result of separate activities designed to preserve the independence and objectivity of each analytic process.  Standard & Poor's has established policies and procedures to maintain the confidentiality of non-public information received during each analytic process. Standard & Poor's and its affiliates provide a wide range of services to, or relating to, many organizations, including issuers of securities, investment advisers, broker-dealers, investment banks, other financial institutions and financial intermediaries, and accordingly may receive fees or other economic benefits from those organizations, including organizations whose securities or services they may recommend, rate, include in model portfolios, evaluate or otherwise address.  For more information, visit www.standardandpoors.com.

SOURCE Standard & Poor's

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