Credit research · 3 articles

How a lender reads a company before the money moves

Credit research is the work done before a loan or a bond is bought, and it asks a narrower question than most analysis. Not whether the business is good, or whether it will grow, but whether it will pay what it owes, on time, through a bad stretch as well as a good one. That question sends the analyst to the cash statement ahead of the income statement, to the credit agreement ahead of the presentation, and to the weakest plausible year ahead of the plan.

I have done both kinds of research, credit and equity, and the pieces here come from reading companies with the lender's question in front. They cover how a model gets built from the cash up, what the habits of stock analysis look like once they are turned around for a creditor, and which conversations with management are worth having. The aim is mechanics rather than forecasts: how each part of the file is read, and why the order of reading shapes the conclusion.