Rapid Ratings Early Warning System Predicted Financial Distress at Delphi Corp Two Years Ahead of Traditional Rating Agencies
Independent Research Provider and global rating agency, Rapid Ratings indicated that its rating of Delphi Corp has been sub-investment grade implying high-risk and assets of very speculative value since 2003.
(PRWEB) October 12, 2005 -- In light of the Chapter 11 bankruptcy protection filing made by auto parts manufacturer Delphi Corporation over the weekend, Rapid Ratings reports that it has rated the company at a high-risk of non-payment since 2003. Delphi's Chapter 11 filing is another example of Rapid Ratings providing the market more timely and accurate credit rating assessment then the traditional rating agencies.
A closer look reveals that in 2005 Rapid Ratings rated Delphi, (a former General Motors subsidiary and constituent of the S&P 500) at D4 (24). This sub-investment grade rating implies high-risk and assets of very speculative value. In 2004 and 2003, Delphi was rated at a similar risk levels of D4 (24) and D1 (35) respectively.
In comparison, two traditional rating agencies classified Delphi as an investment grade company in both 2003 and 2004.
Rapid Ratings gave almost three years advance notice of Delphi’s problems whereas the traditional rating agencies only gave months advance notice to investors and creditors.
Of more importance is the significant deterioration in credit quality that Rapid Ratings identified in 2003. Rapid Ratings’ competitors have only in the last few months reduced their credit ratings to the level that Rapid Ratings has held since 2003.
‘Just as in the case of Enron, Parmalat and HIH Insurance, Rapid Ratings’ unique benchmarking system has revealed troubles in a major global company years ahead of traditional players, providing investors and creditors with critical forward-looking information,’ said Dr. Patrick Caragata, managing director and CEO of Rapid Ratings.
‘With our ratings now available on the leading information networks (Bloomberg and Reuters) investors can now easily obtain more accurate and advanced warnings of financial distress.’
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