• Moody’s updates method of rating consumer durables

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    MOODY’S Investors Service has updated its rating methodology for the consumer durables industry, but said there is no impact on outstanding ratings of stakeholders.

    In a report released on Friday, the credit watchdog said the updated methodology replaced the version in place since September 30, 2014. It removed some outdated references and certain issuer-specific information.

    “Rated consumer durables companies are an extraordinarily diverse group the primary activities of which include the design, manufacture and distribution of products that are not consumed or disposed of quickly, and that can be used for several years,” it said.

    “Durables is a category of consumer goods that do not have to be purchased frequently. Some examples of durables are appliances, home and office furnishings, lawn and garden equipment, consumer electronics, toys, small tools, sporting goods, photographic equipment, jewelry, motor vehicles and motor vehicle parts, turbines and semiconductors, according to Investopedia.

    Part of the industry are companies that sell directly to consumers and companies that sell to other corporations such as certain floor covering and office furniture companies.

    The debt watcher said the methodology includes a detailed rating grid or a reference tool that can be used to approximate credit profiles within the consumer durables sector in most cases.

    The grid provides summarized guidance for the factors that are generally most important in assigning ratings to companies in the consumer durables industry, it said.

    These factors include scale, business profile, profitability, leverage and coverage and financial policy.

    “However, the grid is a summary that does not include every rating consideration. The weights shown for each factor in the grid represent an approximation of their importance for rating decisions but actual importance may vary substantially,” it said.

    The grid uses historical results while ratings are based on our forward-looking expectations. As a result, the grid-indicated rating is not expected to match the actual rating of each company.

    “There were no substantive changes made to the methodology and there is no impact on current outstanding ratings as a result.” Moody’s said.

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