Standard & Poor’s update rating for Ireland


Following  agreement to the 85 billions Euro bailout, Ireland is still “A” rated. I sincerely hope that the Eurozone crisis has been permanently averted and have no wish to see their cost of borrowing increase BUT surely “C” is a more credible rating!?

Lehman Bros was “AAA” rated just before their collapse.

Still, at least S&P are working to improve things stay relevant.

S&P Rating strata:

AAA

the best quality companies, reliable and stable

AA

quality companies, a bit higher risk than AAA

A

economic situation can affect finance

BBB

medium class companies, which are satisfactory at the moment

BB

more prone to changes in the economy

B

financial situation varies noticeably

CCC

currently vulnerable and dependent on favourable economic conditions to meet its commitments

CC

highly vulnerable, very speculative bonds

C

highly vulnerable, perhaps in bankruptcy or in arrears but still continuing to pay out on obligations

CI

past due on interest

R

under regulatory supervision due to its financial situation

SD

has selectively defaulted on some obligations

D

has defaulted on obligations and S&P believes that it will generally default on most or all obligations

NR

not rated

According to Ontonixanalysis of the financial data, Ireland merits a rating of two stars.

Here are Details of our rating stratification

 


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Conventional ratings, such as those issued by rating agencies, focus on the financial aspects of a business. While this is important, it is not sufficient to provide a global idea of the overall state of health of a corporation.

Complexity-based ratings offered by Ontonix are stratified into five levels. This is in accordance with the Principle of Incompatibility – highly complex systems cannot be described precisely. Examples are illustrated above. Complexity-based ratings focus entirely on structural aspects of a business not on its financials or financial performance. Excessive complexity of a business is a fundamental source of its risk exposure as it points to a structure that is easily altered, both via endogenous as well exogenous sources. Since excessive complexity is a “disease” which is invisible to conventional techniques, the idea of a complexity rating is to establish a marker which can expose it. Moreover, high complexity is undesirable because it may lead to surprises and unexpected behaviour.

The interpretation of complexity ratings is as follows:

1-Star: The business is globally close to its critical complexity. Its structure is weak. The business is unsustainable and very fragile. Exposure is very high and the business is highly inefficient and very difficult to manage. It is impossible to make forecasts and define realistic goals.

2-Star: The business is highly complex and difficult to manage and control. Exposure is high as well as inefficiency. The structure of the business if fragile, hence vulnerable. It is difficult to make forecasts.

3-Star: Business complexity is moderately high but its structure is fairly robust. Predictability is acceptable. Exposure is moderate.

4-Star: Low complexity points to a robust business structure. Predictability is high, exposure is low. Business sustainability is quite high. The same may be said of efficiency.

5-Star: Very low complexity indicates a very strong business structure as well as very low exposure. The business is manageable and it is possible to make credible forecasts. The business is potentially highly sustainable and efficient.

In the case of businesses with 1 to 3 star ratings complexity reduction is a must. In those cases, Complexity Profiling is the tool to adopt. It helps identify the sources of high complexity and points to potential solutions. For 4 and 5 star businesses, Complexity Profiling should be used from a monitoring perspective in order to keep the business at a safe distance from critical complexity.

An example of the structure of a business is illustrated below:

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