The goal of issuer analysis is not "like / dislike" but a specific decision: is the bond admitted to monitoring, at what yield do we buy it, and what position size is allowed. For that, every issuer has a profile, an internal rating, a fair yield (fair YTM) and three limit levels.
Stage 0. Market filter
After the weekly market review we set the required yield for each internal rating on three curve segments: under one year, 1–3 years and over 3 years. If at least one of the issuer's bonds offers the required yield, analysis continues. If not, the issuer goes to the yellow zone or is excluded. This saves the team's time: we do not analyse what we would not buy.
Stage 1. Formal screening
Availability and quality of financial statements, agency ratings, legal and regulatory factors, disclosure history. Issuers that fail formal criteria are not considered regardless of yield.
Stage 2. Qualitative analysis
- Business model: how the issuer earns and how sustainable it is.
- Industry and position in it.
- Beneficiaries, majority owners, management.
- Corporate quality and key business risks.
- Litigation, regulatory and contentious factors.
- A short conclusion: what the market, institutional investors and the professional community say.
Stage 3. Quantitative analysis
Dynamics of revenue, gross and operating profit, EBITDA and net income; cash flows by activity, FCF and FFO; debt structure and maturity schedule; liquidity; cost of funding; interest coverage; balance sheet strength over time. Calculations follow a single template so issuers are comparable.
Stage 4. Issue analysis
For each issue we record current yield, tenor, liquidity and its place among the issuer's other bonds. Yield targets are set on three curve segments.
Stage 5. Internal rating, fair YTM and limits
The internal rating is assigned on a scale from BBB- to AAA. Fair yield is derived from the key rate trajectory, the G-curve, deposit rates, the rating and a liquidity adjustment. Leasing companies and microfinance issuers carry an additional 1% premium.
Position size depends on the premium of current yield over fair yield: up to 1% premium we hold the base share, at 3% the share grows to the soft limit, at 5% — to the hard limit. Above the hard limit the position does not grow regardless of yield. This way we buy mispricing, not risk.
Liquidity
For bonds rated A and above the maximum position is limited to ten average daily turnovers. We can always exit a position without materially moving the price.
The profile is alive
A profile has a permanent layer (business, rating, fair YTM, limits) and an update layer: new statements, rating actions, corporate events, status changes. Issuers under active monitoring are updated at least quarterly and upon any material event.