...This report outlines Fitch Ratings' approach to rating issuances backed by partial credit guarantees (PCGs, or partial guarantees). Unlike a full guarantee (the guaranteeing of all non- accelerated interest payments and 100% principal), under partial guarantees investors have exposure to the issuer's underlying credit risk, which can yield less than 100% recovery, and a set percentage of incremental recovery of principal under the PCG. This report specifically addresses the rating analysis of an issuance when a PCG is present and how the differences in PCG structures and their application to various issuances are analyzed. This includes the potential dilution of an issuer's base recovery rate for all its creditors depending on the recourse position of the PCG provider and the effects of relevant subrogation clauses. Fitch's analysis encompasses the notching effect of recovery estimates on loan and bond instrument ratings for non-financial corporates, financial institutions and insurance...
