Fitch Ratings

There are two main types of credit risk that a bond portfolio or position is exposed to. They are credit default risk and credit spread risk. Credit default risk is defined as the risk that the issuer will be unable to make timely payments of interest and principal. Typically, investors rely on the ratings agencies—Fitch Ratings, Moody s Investors Service, Inc., and Standard 8c Poor s Corporation—who publish their opinions in the form of ratings. 

The first step in the Fitch rating process is to estimate the probability of default for each loan in the collateral pool. This will take into account all the factors discussed in the previous section. 

Delayed draw-down note. Fitch Rating. 

Given this new landscape, in 2001, Fitch Ratings created a par based default index specific to the European high-yield market. The objective of this chapter is to compare and contrast default and recovery patterns across the two markets in order to give global bond investors and European investors, in particular, historical and current benchmarks for measuring credit risk. 

In 2001, Fitch Ratings launched a default index dedicated to the emerging European high-yield bond market. The index is a par based index and was created using the same methodology Fitch employs for its US high-yield default series (see Exhibit 28.2). In particular, in order to... 

The first is diffusion capture. This theory was originally proposed by Fitch and Tsai (13) for the aqueous polymerization of methyl methacrylate. According to this theory, any oligomer which diffuses to an existing particle before it has attained the critical size for nucleation is irreversibly captured. The rate of nucleation is equal to the rate of initiation minus the rate of capture. The rate of capture is proportional to both the surface area and the number of particles. 

The particle generation rate was calculated by a step mechanism, namely formation of primary precursor particles by homogeneous nucleation (JLQ.) followed by coagulation to latex particles (8-9). This homogeneous nucleation mechanism is often referred to as the HUFT mechanism for its originators Hansen, Ugelstad, Fitch, and Tsai. 

It was further developed the following year (22), and was based primarily on the scheme of Priest (12) with an idea from Gardon (9d). The latter suggested that the rate of capture of oligomeric radicals in solution by pre-existing particles, R, should be proportional to the collision cross-section, or tfie square of the radius of the particles, r. This has been called the "collision theory" of radical capture. In 1975 Fitch and Shih measured capture rates in MMA seeded polymerizations and came to the conclusion that R was proportional to the first power of the radius, as would e predicted by Fick s theory of diffusion (23). In his book, K. J. Barrett also pointed out that diffusion must govern the motions of these species in condensed media (10). 

Azad and Fitch (5) investigated the effect of low molecular weight hydrocarbon additives on the formation of colloidafr particles in suspension polymerization of methyl methacrylate and vinyl acetate. It was found that the additives n-octane, n-dodecane, n-octadecane, n-tetracosane and mineral oil exerted a thermodynamic affect depending upon water-solubility and molecular weight. Since these effects on emulsion polymerization have not been considered by the earlier investigators, we have chosen n-pentane and ethyl benzene as additives with limited water-solubility and n-octadecane, and n-tetracosane as water-insoluble ones. Seeded emulsion polymerization was chosen so that the number of particles could be kept constant throughout the experiments and only the effect of the other parameters on the rate could be determined. 

Cenco-Fitch Heat transfer apparatus Thermal moisture tester Rate of heating Heat flux Rate of heat and moisture transfer... 

Other approaches for measuring thermal resistance or conductivity of fibers and fabrics include the use of calorimetry (28), thermal flow through a heat sink of known emissivity (2 ), immersion of fibers or fabrics in liquids of known thermal conductivity (30), and measurement of the rate of cooling of textiles or insulating materials by a Cenco-Fitch apparatus (2). 

Oardon based his calculations on a geometric derivation of the radical absorption rate which gave the result that the rate should he proportional to the particle surface area. This derivation, which also was adopted by Fitch and Tsai (1971), has been criticized for not taking the concentration... 

The equations for dN/dt and dRj/dt, as well as for dV dt [Eq. (39)] are solved by numerical integration for the polymerization stem MMA-K2S20e water, with rate constants obtained from the literature. The initiator efficiency was set equal to unity. Particle numbers between 10 and 10 were drained for initiator concentrations of 10 -10 mol/dm. The calculations showed that N should be almost independent of the chosen value offor values between 5 and 70 (in strong contrast to our calculations). The reason for this is probably that aqueous-phase termination with subsequent precipitation is the dominant particle-formation mechanism in Aral s model, even more so with increasing initiator concentration. The theoretical particle-formation time was on the order of 2 sec, a veiy low value compared to the experimental results of Fitch and Tsai. Aral et at. found that their calculated particle numbers were approximately in accordance with the experimental results of Yamazaki et al. (1968) for emulsifier-free polymerizations. Aral s model does not inclnde any coagulation mechanisms. It will therefore have the same shortcomings as most other models, namely that the strongly increased particle number in... 

A related matter concerns the physical mechanism by which radicals (primary or oligomeric) are acquired by the reaction loci. One possibility, first proposed by Garden (1968) and subsequently developed by Fitch and Tsai (1971), is that capture occurs by a collision mechanism. In this case, the rate of capture is proportional to, inter alia, the surface area of the particle. Thus, if the size of the reaction locus in a compartmentalized free-radical polymerization varies, then a should be proportional to r, where r is the radius of the locus. A second possibility (Fitch, I973) is that capture occurs by a diffusion mechanism. In this case, the rate of capture is approximatdy proportional to r rather than to r. A fairly extensive literature now exists concerning this matter (see, e.g., Ugelstad and Hansen, 1976, 1978. 1979a, b). The consensus of present opinion seems to favor the diffusion theory rather than the collision theory. The nature of the capture mechanism is not. however, relevant to the theory discussed in this chapter. It is merely necessary to note that both mechanisms predict that the rate of capture will depend on the size of the reaction locus constancy of a therefore implies that the size of the locus does not change much as a consequence of polymerization. 

One promising area of investigation is the use of ultrasound to speed up the operating rates of existing aqueous electroplating systems which were not economically viable in the past. These systems can then become feasible and Fitch [102] has described the use of aqueous based compounds such as sodium salts (e.g. hydroxide, silicate, phosphate, carbonate, and borate) as an alternative to the more toxic materials commonly used. These inorganic compounds are inexpensive, readily available, and highly effective in the presence of ultrasound. 

The most well-known and widely accepted rating agencies are Standard Poor s Ratings Group ("S P") and Moody s Investors Service, Inc. ("Moody s"). Duff cmd Phelps and Fitch Investors Service, Inc., are also nationally prominent. 

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