Fitch Investors Service Inc. has created a new private debt rating designed to help private placement investors determine the likelihood of recovering their principal plus interest.

By accounting for collateral covenants, the new rating service could provide the investors with a rating to correlate with the cost of capital. The debt rating includes a consideration of the probability of recovering secured collateral.

The rating is geared to insurance companies - and regulators at the National Association of Insurance Commissioners - that need to determine the minimum capital requirements necessary to cover exposure to a loan.

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