Falcon Group is among the first alternative finance providers to achieve ratings from two major credit ratings agencies, reflecting the increasing credibility of the alternative finance market.
Moody’s has assigned the alternative financier with a Ba3 first-time issuer rating and a Ba3 corporate family rating (CFR), and S&P has given Falcon a B+/B rating.
Both agencies gave Falcon a stable outlook, citing the company’s strong profitability, good capital ratios, established market position and low level of historical credit loss, with the expectation that Falcon’s historical performance will continue into 2015.
Falcon CEO, Will Nagle, tells GTR that the ratings demonstrate the credibility of the alternative financing industry, which until now may have suffered from the misconceptions of some borrowers.
“The rating process certainly shifts any shadows away from our industry and can only be good for other players entering the space,” he says.
“One of the major challenges of the industry is how we reach out to clients. The industry sometimes suffers from a lack of exposure to corporates, and there’s always that word ‘alternative’ that some borrowers don’t like.”
According to Nagle, approaching the ratings agencies is a natural next-step for alternative finance companies of Falcon’s size and influence, and other alternative finance providers, including peer-to-peer lenders and crowd-sourcing companies, could also benefit. “We are at the stage now where we should be a rated entity, and it can only be a good thing for our company.”
“There’s still a lack of understanding in alternative structures, and ratings can help companies lose some of the misconceptions towards their products.”