Exceptional
The company has an extremely strong financial position, excellent management, and operates in a stable or growing industry. It has minimal risk of default and is considered best-in-class.
Borrower Scoring System
Being a registered member of PolyReg SRO, Maclear is committed to maintaining the highest safety standards for both investors and borrowing projects. We strictly adhere to Swiss regulatory criteria, including AML, KYC, and GDPR guidelines, as well as constantly work on improving the assessment process.
Our safety team regularly reviews the industry standards and do their best to ensure the Maclear platform 100% corresponds to them.
To improve transparency and decision making efficiency, we use a scoring system. We use it to assess and rate a company's financial health, risk profile, and overall performance before adding it to the Maclear platform.
AAA to D Investment Grade Credit Rating
The scoring model chosen by Maclear experts employs a grading scale from AAA (exceptional) to D (default), consistent with industry standards used by leading credit rating agencies such as S&P Global, Moody's, and Fitch Ratings.
Credit Rating Scale
DCCCCCCBBBBBBAAAAAA
Higher RiskLower Risk
Our credit rating system employs a weighted aggregation approach consistent with industry best practices used by leading rating agencies. Each borrowing project undergoes rigorous evaluation across all three risk dimensions, with the final rating reflecting the relative importance of each component.
The corresponding Probability of Default (PD) is a quantitative measure aligned with Swiss regulatory standards and risk factors, ensuring the relevance of the assessments.
Scoring Model Components
While the main objective of the model is to ensure a comprehensive evaluation of key risk factors, it's structured around three core dimensions:
- Financial Risk: Assessed using metrics such as Total Liabilities/Tangible Net Worth (TNW), Funded Debt/EBIT, and Debt/Equity.
- Qualitative Risk: Evaluated through scores for Business, Management, and Industry factors.
- Coverage & Liquidity Risk: Measured using ratios such as Debt Service Coverage Ratio (DSCR), EBIT/Interest, and Current Ratio.
Each dimension is assigned a grade based on predefined criteria, and the overall grade is determined by aggregating these results. The corresponding Probability of Default (PD) provides a quantitative measure of the organization's default risk.
How often are ratings updated?
The Maclear Credit Rating is updated quarterly, based on comprehensive monitoring of financial performance, business developments, management changes, and macroeconomic factors. Material improvements or deterioration can result in immediate rating adjustments to ensure our assessments remain current and accurate.
What can cause a downgrade?
- Deterioration in debt coverage ratios
- Significant decrease in profitability
- Liquidity constraints or cash flow problems
- Management changes or governance issues
- Adverse industry or economic conditions
- Missed debt service payments
What can cause an upgrade?
- Improved financial ratios and profitability
- Successful capital injection or refinancing
- Enhanced market position or product offering
- Strengthened management team
- Improved operational efficiency
- Favorable industry developments
How The Model Components Are Allocated
Not to miss out a thing and determine the overall grade, the scoring system also includes in the calculation a range of individual grades for Financial Risk, Qualitative Risk, and Coverage & Liquidity Risk.
The grades are analyzed and combined using a weighted aggregation approach. This methodology ensures that the overall rating reflects the relative importance of each dimension while maintaining consistency with industry best practices.
| Category | Metrics | Purpose |
|---|---|---|
| Financial Risk | Total Liabilities/TNW | Assess leverage and balance sheet strength. |
| Funded Debt/EBIT | Evaluate debt relative to earnings. | |
| Debt/Equity | Measure financial structure and risk. | |
| Qualitative Risk | Business Score | Assess competitive position and growth potential. |
| Management Score | Evaluate leadership quality and strategic direction. | |
| Industry Score | Analyze industry stability and outlook. | |
| Coverage & Liquidity | Debt Service Coverage Ratio (DSCR) | Measure ability to service debt. |
| EBIT/Interest | Assess interest coverage and cash flow adequacy. | |
| Current Ratio | Evaluate short-term liquidity and ability to meet obligations. |
What Do AAA to D Credit Ratings Mean?
According to the given Scoring System, the company's overall performance ranges from AAA to D, comprising 10 grades, which provides one of the most inclusive approaches.
AAA AA Very Strong
The company has a strong financial position, good management, and operates in a stable industry. It has very low risk of default and is highly reliable.
A Strong
The company has a solid financial position, competent management, and operates in a reasonably stable industry. It has low risk of default and is considered reliable.
BBB Adequate
The company has an acceptable financial position, adequate management, and operates in a moderately stable industry. It has moderate risk but is still considered investment-grade.
BB Speculative
The company has a weaker financial position, some management concerns, and operates in a challenging industry. It has elevated risk and is considered non-investment grade (speculative).
B High Risk
The company has significant financial weaknesses, poor management, and operates in a declining or volatile industry. It has high risk of default and is considered highly speculative.
CCC Substantial Risk
The company is facing severe financial stress, management is ineffective, and the industry is in crisis. Default is a real possibility in the near term.
CC Very High Risk
The company is in critical financial distress, management is failing, and the industry is collapsing. Default is likely without immediate intervention.
C Imminent Default
The company is on the verge of collapse, with no viable path to recovery. Default is imminent, and operations are likely to cease.
D Default
The company has failed to meet its financial obligations, and operations have halted. Bankruptcy or liquidation is underway.
The Grading Model As a Powerful Tool For Risk Scoring
When evaluating borrowing projects, it's crucial for experts to maintain objectivity and apply a comprehensive approach that considers all key factors influencing financial stability and risk. A multipurpose assessment ensures that no critical aspect is overlooked, adding to a more accurate and reliable scoring process.
The Maclear safety team has carefully selected this Scoring Model because it best aligns with investor expectations, providing them with the insights needed to make informed decisions and achieve long-term success. For borrowing projects, this rigorous risk evaluation serves as both a benchmark and a motivating factor, highlighting areas for financial improvement, encouraging better risk management, and the adoption of higher financial standards.
This is achieved by the key objectives of the Model, including:
- Risk assessment: To evaluate the organization's financial stability, operational efficiency, and exposure to various risks.
- Decision support: To inform strategic decisions, such as resource allocation, investment planning, and risk mitigation.
- Stakeholder communication: To provide stakeholders with a clear and concise summary of the organization's risk profile and performance.
- Monitoring and improvement: To track changes in risk levels over time and identify areas for improvement.
With the introduction of this enhanced borrower scoring system, Maclear continues to provide a transparent, structured, and data-driven approach to the platform security. Your trust is always our top priority.
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