Role The role of credit rating agents (CRAs) is to provide an objective and analytical opinion on the risk of payment defaults by looking at various factors that help investors decide whether to invest in particular securities. Investors in capital markets are very sensitive to risk and some investors are prevented by their internal constitutional documents from investing in low grade securities. Generally, the higher the investment risk, the greater the return (interest/coupon) the investor will seek. Both (i) the company issuing the security instruments and (ii) the security instruments themselves can be rated. An issuer’s debt securities may be rated separately from the issuer where the issuer is a company specially set up for the issuance (a special purpose vehicle or where the debt securities benefit from credit enhancements (eg a guarantee) to make them stronger than the standing rating of their issuer. By way of example, the following may be rated: • the issuer • senior debt/syndicated loans • medium term notes (MTNs) • commercial paper (CP) • fixed income securities • sovereign debt • residential mortgage backed securities (RMBS)

The Financial Conduct Authority (FCA) has updated its market study MS19/1: Credit Information and Credit reporting webpages with a joint statement from the Interim Working Group (IWG). The statement notes that the timeline for reports three and four has been extended to allow for more comprehensive pre-issuance industry engagement and the development of an in-depth transition plan from the Steering Committee on Reciprocity (SCOR) to the future Credit Reporting Governance Body (CRGB). The goal is now to issue report three to the FCA in November 2024 and report four in February 2025.

The risk that a bond issuer will default on their obligations. A function of the credit quality of the issuer. Government bonds of developed countries are assumed to have no credit risk. Credit risk is usually associated with corporate bonds.

The term used to describe the additional yield paid above that for equivalent dated gilts.

The Companies Act 2006 (CA 2006) contains provisions that require credit transactions for the benefit of directors, persons connected with directors and related arrangements to be approved by the members of a company. Approval is required for such transactions as they involve directors (or their connected persons) and are considered to be particularly open to abuse. The relationship between the statutory provisions requiring approval of such a transaction and the general duties of a director that are set out in statute is discussed in Practice Note: Directors' duties—scope, nature, interpretation and application. One of the general duties of a director set out in statute is the duty of a director to declare if they are in any way, directly or indirectly, interested in a proposed transaction or arrangement with the company of which they are a director and the nature and extent of that interest to the other directors. In relation to: • a director’s obligation to declare an interest in a transaction

The Companies Act 2006 (CA 2006) contains provisions relating to the consequences of a failure to obtain the required members' approval of credit transactions made by a company for the benefit of directors, persons connected with directors and related arrangements. For further information about the requirement for members' approval, including details on key transitional provisions, see Practice Note: Credit transactions for the benefit of a director, a connected person and related arrangements—requirement to obtain members’ approval. The term 'director' for the purposes of these statutory provisions includes any person occupying the position of director by whatever name called and a shadow director. If the company making the credit transaction is a company with a listing of equity shares in the equity shares (commercial companies) category the UK Listing Rules (UKLR), particularly UKLR 8 on related party transactions, may apply (see Practice Note: Equity shares (commercial companies) listing category—key continuing obligations). For detailed Commentary on loan to directors and related transactions see Loans and related transactions

Ireland-Banking & Financial Services analysis: This article, was written by Dario Dagostino, Mark Devane, Chloe Culleton & Sarah Lee of A&L Goodbody LLP and discusses how the Central Bank of Ireland (Central Bank) fined Swilly Mulroy Credit Union (SMCU) €36,273 for multiple breaches over a seven and a half year period.

The Prudential Regulation Authority (PRA) has issued a letter dated 26 March 2025, fromits director of UK Deposit Takers, Laura Wallis, which aims to clarify the regulatory position with respect to credit unions that hold an investment in, or are users of, credit union service organisations (CUSOs). The PRA supports the establishment of CUSOs that meet legislative requirements and manage risks prudently, however, current regulation does not explicitly mitigate the risks associated with a credit union holding an investment in a CUSO.  The PRA will therefore consult later this year on amending Rule 6.3 and 6.4 of the Credit Unions Part of the PRA Rulebook in order to make it clear that investment of surplus funds in CUSOs are permitted (where the CUSO investment meets the legislative requirement); and consult on its expectations for credit unions that invest in and/or use CUSOs.

The Prudential Regulation Authority (PRA) has published two portfolio letters addressed to directors in the credit union (CU) sector, one for CUs with total assets up to £10m and one for CUs with total assets between £10m and £50m. The PRA summarises the key risks for each peer group and the actions the PRA expects these firms to take. PRA supervisory engagement with CUs over the next 12 months will focus on operational resilience and minimising the risk of disorderly failure, in addition to good corporate governance. The PRA also sets out feedback following thematic visits carried out in early 2024 to assess compliance with supervisory statement SS2/23: Supervising credit unions.

A person to whom a debt is owed and who therefore, has a right to claim payment of a sum of money due to him.

[Insert name of creditor] [Insert address of creditor] [Insert fax number of creditor] [Insert email address of creditor] [Insert name of recipient and/or their job title, if appropriate, eg company secretary/directors of [name of company]] [Insert address of company] [Insert date] Dear

A ratio measuring how long on average it takes a company to pay its creditors. Calculated by dividing the trade creditors shown in its accounts by its cost of sales, or sales, and then multiplying by 365. For example, a company with creditors of 900,000 and sales of 12 million, takes on average just over 27 days to pay its bills. Within reason, the higher the number the better, although if a company is very slow in paying its creditors (say 100 days plus) it is worth asking if this is because it has problems generating enough cash quickly enough to pay them.