Drafting Credit Memos

When To Use

Recommending a new bond purchase, loan participation, or credit facility for a portfolio or credit committee
Documenting the rationale for increasing, reducing, or maintaining an existing credit exposure
Presenting a credit opinion on a new issuer or counterparty for internal approval
Refreshing an annual or semi-annual credit review on a held position
Supporting a rating change recommendation (upgrade, downgrade, or watch placement)

Issuer/borrower identity: Legal name, ticker, CUSIP/ISIN, sector classification (GICS or internal taxonomy)
Financial statements: Minimum three years of audited financials plus latest interim period; confirm GAAP vs. IFRS basis
Capital structure detail: Debt schedule with maturities, coupon rates, seniority, covenants, and guarantor structure
Market data: Current spread levels (OAS, Z-spread, or CDS), comparable issuer spreads, recent price action
Rating agency views: Moody's/S&P/Fitch ratings, outlooks, and most recent rating action commentary
Industry context: Sector fundamentals, competitive positioning, key risk drivers (commodity exposure, regulatory, cyclicality)
Transaction specifics (if new issue): Proposed terms, use of proceeds, pricing guidance, syndicate structure
Portfolio context: Current exposure, concentration limits, mandate guidelines, and any investment policy constraints [VERIFY]