You are to analyze the issuer and specific bond for the credit risk and assign a bond rating in accordance with the Standard & Poor’s ratings system. The credit risk has 2 components: issuer general...

FNCE 3170 Guidelines for Bond Assignment Winter 2022    1
FNCE 3170 Guidelines for Bond Assignment Winter 2022    8
FNCE 3170 GUIDELINES FOR BOND ASSIGNMENT WINTER 2022
Table of contents
Company Analysis    3
Industry & Specific Competitor Analysis    4
Economic Analysis    6
Capital Market Analysis    8
Specific Firm & Bond Issue    8
Examining the Indenture for Clauses – credit risk collateral and seniority    9
Liquidity (Marketability) Risk    11
References    12
Company Analysis
Avery Dennison Corporation is a multinational company which specializes in the production and distribution of pressure sensitive adhesive materials, apparel branding label and tags, specialty medical products and Radio Frequency Identification inlays. Avery Dennison is headquartered in Glendale, California. The company was founded by R. Stanton Avery in the year 1935. Initially the company was named as Avery Adhesive and was later changed to Avery Dennison Corporation after it was merged with Dennison Manufacturing Company in the year 1990. Avery Dennison Corporation acquires 73% of the revenue from its main business which is pressure sensitive materials while the earnings from retail branding and information solution contributes 26% of the revenue. Further, Avery Dennison conducts its business operation in more than 50 countries and are able to employ around 32000 people globally. In the year 1955, the company was able to establish its first subsidiary in Netherlands. The operating income of the company as on 1st January, 2022 is $8.408 billion and the net income of the company is $740.1 million.
A significant portion of sales of Avery Dennison Corporation is derived from the countries such as China. Further, the business operations of the company were able to crater in Asian, Latin American and Eastern European markets. Due to the impact of covid-19 and consequent decline in sales automotive production along with negative economic conditions will impact the business in China. Further there is a tariff implemented by the US government on the goods which are being imported from China due to diplomatic reasons. Therefore, the company’s ability to conduct its business in major emerging countries such as China will be impacted due to changes in the laws and regulations, alterations in taxation policies, land use rights, foreign currency conversion and regulation of private enterprises.
    There has been negative impact on the business of Avery Dennison Corporation due to the impact of novel coronavirus. If there is any future health related crisis, it can also affect the economies and the financial markets where the company operates. This could lead to economic downturn, can impact the demand of the products and the business operations. Also, if the legal system and the political situation in the emerging countries is not well-established, then it could lead to disruptions in the due to decreased consumer purchasing power, rising costs and reduced demand of products.
Industry & Specific Competitor Analysis
Avery Dennison Corporation is a leader in material science and manufacturing technology. Further, the specializes in the manufacturing and design of a wide variety of functional and labelling constituents. The company deals in products which consists of pressure sensitive materials for labels and graphics applications, medical tapes and retail application, various industrial adhesive and bonding solutions, tags and labels on the apparels and in the manufacturing of Radio Frequency Identification (RFID) solution.
The competitive advantage of Avery Dennison Corporation is its global presence in more than 180 countries. Further, it is an extensive expertise in the core business and helps them to be admired as the industry leader in the material science and manufacturing technology business.
The competitor of Avery Dennison Corporation in the LGM category is UPM Raflatac. The company is a subsidiary of the holding company, UPM Corporation and is considered as the biggest competitor in label and packaging materials. The other competitors of Avery Dennison are Lintec Corporation, Flexcon Corp and Ritrama Spa which is the subsidiary of the holding company Fedrigoni Group.
In terms of the graphics and reflective products, the largest competitor of Avery Dennison Corporation is 3M Company and Orafol Group. Further, since Avery Dennison is the market leader in the area of Pressure sensitive adhesives and ingredients, there is limitations for entry of the new players due to technical knowhow and huge necessity of capital. Further, the entry of new entrants becomes difficult due to extensive technical expertise, the scale and scope of operations, the high quality of products and services, the distribution capacities, the strength of the brand, the innovation of the product. These are the factors due to which the competitors and the new entrants are at a disadvantage in maintenance and development of a competitive position in the market.
Further, in the retail branding and information solutions the major competitor of Avery Dennison is Checkpoint Systems, Inc. This company is a subsidiary of CCL Industries Inc. The other two competitors are R-pac International Corporation and SML Group Limited. The area of competitive advantage of Avery...