Talking Shop: Disclosing Info to Ratings Agencies Before Earnings

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# Risk Management

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected].

Member question: “Does anyone in the group discuss quarterly earnings with the rating agencies before the press release?” Peer answer 1: “If there is news that we believe they should hear in advance of the earnings announcement, then we do meet with them in advance.” Peer answer 2: “We haven’t been asked to discuss earnings right before press releases. However, a rating agency asked us to provide an updated cash flow forecast/debt paydown in a blackout window, and we complied with the request.” Peer answer 3: “We verbally discuss key aspects of the results in advance if we expect them to take an action post earnings. We don’t share any presentation materials until after the earnings.” Peer answer 4: “We had talked to them before earnings releases. We recently changed and now do it after earnings updates. They have not reacted negatively so far.” Peer answer 5: “We would share information prior to the earnings release if we felt it was significant enough to impact our credit.” NeuGroup Insights reached out to Jonathan Richman, a partner at law firm Proskauer, for his perspective on potential legal issues that may stem from disclosing information with rating agencies in advance of earnings.

“The big concern is Regulation FD, which prohibits advance disclosure of material nonpublic information (MNPI),” he said.

“However, an issuer can disclose MNPI to a rating agency before public disclosure if the rating agency has agreed to keep the information confidential and not use it before it has been disclosed to the market in general.”

Talking Shop: Disclosing Info to Ratings Agencies Before Earnings

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected].

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