Standard & Poor’s Turns to ACT for Help Assessing Credit Analysts’ Knowledge

ACT is working with one of the world’s leading providers of credit ratings to provide its analysts with a broad understanding of the financial and capital markets, as well as the criteria the company uses during the ratings process.

Standard & Poor’s (S&P) partnered with ACT to develop a rigorous credit analyst certification exam that assesses the training the analysts receive to further develop their skills. ACT administers the exam online at ACT Center^® testing sites in the United States and at S&P offices in 25 international locations.

Every year, ACT helps companies like Standard and Poor’s with a full range of test development and delivery services.

“It’s important for Standard & Poor’s analysts to have broad knowledge of the capital markets, as well as a deep understanding of the rating criteria that applies to the industries and sectors they follow. The analyst certification program helps us achieve that objective and demonstrates our analysts’ capabilities to outside constituents,” said Jeff Crane, senior director, rating analyst education, S&P.

Credit rating analysts are responsible for developing and analyzing financial information, including assessing business and industry risk, financial obligations, earnings, and profitability information. They evaluate the data and provide their view on the credit quality of an entity or individual bond.

S&P chose ACT based on reputation, said Crane. “ACT is very knowledgeable about the test development and administration process. We needed a company that would give us the time and attention to develop a valid and reliable exam that would assess our staff’s knowledge and understanding. ACT has met—and even exceeded—our expectations.”

S&P worked with New York University’s Stern School of Business on the development of the curriculum for the two-level certification program. The first level focuses on basic knowledge of capital markets and S&P’s criteria and methodology for credit analysis. The second level concentrates on specific issuer or asset class analysis relevant to the area in which the analyst works.

Subject to local laws, S&P requires all of its credit analysts—approximately 1,300 people worldwide—to achieve specific scores on both levels to be eligible to serve as primary credit analysts and to vote on a ratings committee.

New hires participate in on-the-job training, supplemented by a two-week education process, during which they spend the first week studying capital markets and the second week studying the basic drivers of credit analysis. Upon completion of the two-week course, they take the Level I exam. Additional training and on-the-job experience prepare analysts for the Level II exam focusing on their respective analytical discipline.

The certification exams are aligned with S&P’s high expectations for its credit analysts. The majority of new credit analysts hold either a master’s degree in business administration or finance or the Chartered Financial Analyst designation. In addition, analysts must participate in at least 25 hours of continuing analytical education each year.