BWL Plc’s Credit Rating Upgrade and Implications
A firm’s credit rating is an important determinant of how it will relate to its creditors, lenders, and other third parties that support the business. BWL plc has received a credit rating upgrade meaning that it can leverage this position to improve its overall relationship with its partners. One significant implication of this upgrade is that it can get loans at better rates than its competitors. This is an important consideration for the business because it operates in a homogenous market that makes it difficult for the firm to differentiate itself from its competitors on any other ground.
By getting good interest rates due to its positive credit rating, the company also can better leverage its financial resources to outperform rivals because it would be getting money at a cheaper rate than its competitors do. This statement suggests that the firm is in a more favorable position of reporting better profitability numbers from its operations compared to its rivals because of its access to affordable credit. Indeed, while its rivals would be paying higher premiums for accessing loans, BWL plc can leverage its low-interest payments to improve its bottom-line performance.
Another implication for the credit upgrade would be a positive image or reputation for the business. In a homogenous market where firms have few competencies to differentiate performance, it would be necessary for BWL Plc to leverage its positive credit rating to boost its image in the eyes of its clients. This is an intangible consequence of its operations because customers are often attracted to firms that have a good reputation in the industry and among their peers. Furthermore, many of them depend on third-party analysis, such as the views of credit rating agencies, to determine which businesses to work with.
A credit rating upgrade implies that BWL will enjoy a positive image in the eyes of its customers, and it can use it to improve its reputation or increase its sales. Furthermore, with a positive market reputation, the company can improve its chances of borrowing from public institutions or from the market through additional floating of shares. This action will not only provide additional revenue streams for the business but could also lead to a significant increase in the company’s share price.