DBRS Morningstar Publishes Updated Methodology for Forest Products Industry, Adds ESG Overlay to Other Corporate Finance Methodologies

DBRS Morningstar published an updated version of Rating Companies in the Forest Products Industry (the Methodology).

DBRS Morningstar has conducted a periodic review of the Methodology. This update supersedes the previous version published on March 19, 2020, and is effective as of March 16, 2021. DBRS Morningstar deems the update not to be material and has determined that no ratings are expected to change as a result of this update.

In addition, the Methodology, and all methodologies in the list that follows, have been, or over the next several days will be, updated to include the following three editorial changes (none of which are expected to cause any rating changes).

(1) In the section entitled “Introduction to DBRS Morningstar Methodologies,” the following new bullet point will be added: “Four criteria are used in the ratings of virtually every corporate issuer and are incorporated by reference into this methodology: (1) "DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings," (2) "DBRS Morningstar Criteria: Evaluating Corporate Governance," (3) "DBRS Morningstar Criteria: Common Adjustments for Calculating Financial Ratios," and (4) "DBRS Morningstar Criteria: Rating Corporate Holding Companies and Parent/Subsidiary Rating Relationships."”

(See note below the listed methodologies for exceptions to this update.)

(2) In the overlay section, the following text will be added (and in methodologies that have a “Corporate Governance Issues” general overlay factor, the section entitled “Corporate Governance Issues” will be replaced with the following text):

“ESG Considerations
Environmental, Social, and Governance (ESG) factors may affect a credit rating and/or the related credit analysis. The impact of ESG factors may vary across industries, sectors, or asset classes and is described in "DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings." Where an ESG factor is material to a corporate rating, but is not otherwise addressed in a BRA/FRA factor or other overlay, DBRS Morningstar will reflect the impact of the ESG factor on the rating through this general ESG overlay.”

(3) In the section entitled “Rating the Specific Instrument and Other Criteria,” the following new text will be added as the second bullet point: “In addition to this methodology, the following criteria may be used from time to time in determining a rating.” Further, any bullet point in this section referencing “DBRS Criteria: Common Adjustments in Calculating Financial Ratios” will be deleted.

List of Methodologies:
-- General Corporate Methodology
-- Rating Canadian Airport Authorities
-- Rating Canadian Municipal Governments*
-- Rating Canadian Provincial and Territorial Governments*
-- Rating Canadian Public Hospitals*
-- Rating Casino Operators and Companies in the Online Gaming Industry
-- Rating Companies in the Airline Industry
-- Rating Companies in the Automotive Manufacturing and Supplier Industries
-- Rating Companies in the Broadcasting Industry
-- Rating Companies in the Canadian Grain Handling Industry
-- Rating Companies in the Canadian Long-Term Care Industry
-- Rating Companies in the Capital Goods Dealership Industry
-- Rating Companies in the Communications Industry
-- Rating Companies in the Construction and Property Development Industry
-- Rating Companies in the Consumer Products Industry
-- Rating Companies in the Forest Products Industry
-- Rating Companies in the Independent Power Producer Industry
-- Rating Companies in the Industrial Products Industry
-- Rating Companies in the Merchandising Industry
-- Rating Companies in the Mining Industry
-- Rating Companies in the Oil and Gas and Oilfield Services Industries
-- Rating Companies in the Pipeline and Diversified Energy Industry
-- Rating Companies in the Printing Industry
-- Rating Companies in the Publishing Industry
-- Rating Companies in the Railway Industry
-- Rating Companies in the Regulated Electric, Natural Gas, and Water Utilities Industry
-- Rating Companies in the Services Industry
-- Rating Container Terminal Operators
-- Rating Entities in the Real Estate Industry
-- Rating Project Finance
-- Rating Public Universities
-- Rating Public-Private Partnerships
-- Rating Solar Power Projects
-- Rating Sports Franchises and Stadium Financings
-- Rating Wind Power Projects

*Certain public finance methodologies (identified with * above) will only incorporate by reference “DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings.”

Notes:
For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

DBRS Morningstar methodologies are publicly available on its website www.dbrsmorningstar.com under Methodologies & Criteria.

For more information on this methodology or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].