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According to Standard & Poor’s rating methodology, a parent holding company loan will be downgraded if...

According to Standard & Poor’s rating methodology, a parent holding company loan will be downgraded if the percentage of priority liabilities relative to available assets exceeds 20%. This is an example of credit reduction due to:

1. Structural Subordination

2. Contractual Subordination

3. Pari Passu Obligation

4. Collateralized Obligation

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Answer #1

Answer : 1.Structural subordination

According to Standard & Poor’s rating methodology, a parent holding company loan will be downgraded if the percentage of priority liabilities relative to available assets exceeds 20%. - Is due to Structural Subordination

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