Our approach to credit assessment
For the full seven-step rating process — from request to publication and surveillance — see the For Issuers page.
Summaries of the dimensions each methodology assesses. The full documents — weights, factor tables, band edges and notching rules — are published in the Methodology Library, with the version archive and committee approval references.
Methodology Library — full documentsOverlays applied to the standalone profile: the information-sufficiency (transparency) cap — which includes accounting-framework quality: statements prepared under local GAAP (incurred-loss basis) rather than IFRS 9 are deducted — though local GAAP that already applies the IFRS 9 expected-credit-loss model is treated on a par with IFRS 9 and is not deducted — an unidentifiable basis is deducted less, and mere adoption is never rewarded — the government-related-entity support framework (support only lifts, bounded by the sovereign anchor), trend-derived outlooks, and calibrated stress-scenario analysis.
Islamic ratings are published with Sharia Governance and Corporate Governance sub-assessments (Very Strong / Strong / Adequate / Weak) derived from the applied scorecard itself. In the transparency overlay, AAOIFI accounting standards (AAOIFI FAS, including the FAS 30 expected-credit-loss model) are treated as fully equivalent to IFRS 9 — an Islamic bank is never disadvantaged for reporting under AAOIFI rather than IFRS.
Subject to the same transparency and support overlays.
Actuarial depth (claims-development triangles, reserve adequacy) expands as time-series data accumulates. Takaful operators are currently assessed on the same insurance scorecard; dedicated Sharia-governance and participants'-fund factors are a planned methodology update.
Instruments are rated on the (LY) national scale, notched from the issuer rating for the instrument's own recourse and protections.
Fund credit-quality opinions on the (LY) national scale; Sharia-compliant funds are assessed with their Sharia oversight framework within governance.
Every rating carries a scheduled review at least annually, and is revisited on new financial statements or material developments. An issuer without current audited accounts is capped under the information-sufficiency framework and placed on watch. When we make a material change to a rating category, model, assumption or methodology, we notify the Authority and disclose it publicly with its impact, and re-review every affected rating within six months (Art 20(4)).
How our ratings perform over time — upgrade/downgrade and default rates — is published in our (Art 18(5)-(7)).
Before we issue any new rating, review or update, we notify the rated entity of the material information we relied on and give it an agreed window to review and comment; the committee weighs those observations before deciding (Art 16(11)). Any entity that disagrees with a preliminary assessment may request a full and final rating.
After publication, any concern can be raised through our , with statutory response times and escalation to the LCMA.
Withdrawal is an announced rating action with a stated reason — never a deletion: the rating record and its history remain public, preserving the integrity of the register.
Ratings are assigned on the Libya national scale and carry the (LY) suffix: a 22-grade long-term scale from AAA(LY) to D(LY), and a 7-grade short-term scale derived from it through the published correspondence
SANAD ratings are assigned on the Libya national scale and carry the (LY) suffix — for example BBB+(LY) — following the international convention for national-scale ratings. The suffix identifies the scale, not the agency: a national-scale rating ranks creditworthiness relative to other obligors in Libya only, and is not comparable with ratings assigned on other national scales or on the international scale. SANAD does not currently assign international-scale ratings; should it do so in the future, they will be clearly distinguished from national-scale ratings.
A credit rating is an opinion formed on verifiable information. As part of its governance analysis, SANAD assesses the timeliness, completeness, and audit quality of an issuer's financial reporting — consistent with international rating practice.
Late statutory filing (banks must file audited accounts within three months of year-end under Banking Law 1/2005; other issuers within four months under Law 23/2010), stale accounts, statements that are not independently audited, and qualified, adverse, or disclaimer audit opinions weaken an issuer's governance assessment and can lower the rating.
Where an issuer cannot produce current audited financial statements, the achievable rating is capped progressively lower the longer it has been unable to disclose — from BB+ beyond 18 months stale down to CCC+ for accounts more than six years old — and unaudited statements or an adverse/disclaimer opinion are likewise capped. An issuer that has never produced any accounts is capped at CCC+. This is a transparency penalty, not an assessment of default, and the rating is placed on a negative Rating Watch until current audited accounts are filed.
Failure to file is a transparency and governance matter, not a payment default. It never, of itself, results in a default (D) rating. Where SANAD can no longer form a credible opinion, it may withdraw or suspend the rating for insufficient information.
These provisions ensure that issuers which do not disclose verifiable, current audited accounts cannot attain or retain an investment-grade rating on the strength of unverified figures.
SANAD forms an issuer's intrinsic (standalone) credit assessment first, then separately considers the likelihood of extraordinary support from a government owner or group — consistent with international practice for government-related entities. The two are kept distinct and disclosed separately.
We first assess the issuer on its own financial and business strength, without assuming any extraordinary external support. Where government ownership weakens that intrinsic strength — through mandated dividends, price controls, or political interference — it is reflected here as a drag, not credited as support.
For state-owned and government-related entities, we then assess the likelihood of timely extraordinary support using the entity's policy role, the strength of the government link and control, and the default dependence between the issuer and the state. This can raise the standalone grade by a measured number of notches. Where the issuer is exposed to the same risks as the government — for example, oil revenue — that dependence reduces the uplift.
A government-related entity is not rated above the sovereign that supports it. The supported rating is bounded by an administered sovereign reference, and where information is insufficient the information-sufficiency ceiling continues to apply as well.
The standalone grade and the supported grade are recorded separately, so the basis of every rating — intrinsic strength versus state support — is transparent to issuers, investors, and the regulator.
In accordance with Article 16(4) of LCMA Board Resolution No. 38 of 2024, our rating models are designed to comply with Islamic Sharia principles. Our methodologies incorporate Sharia-compliant financial metrics and assessment criteria.
Short-term ratings address obligations with an original maturity of up to 13 months and are derived from the long-term rating through the published correspondence below.
| Long-term range | Short-term |
|---|---|
| AAA(LY) – AA-(LY) | F1+(LY) |
| A+(LY) – A-(LY) | F1(LY) |
| BBB+(LY) – BBB(LY) | F2(LY) |
| BBB-(LY) | F3(LY) |
| BB+(LY) – B-(LY) | B(LY) |
| CCC+(LY) – C(LY) | C(LY) |
| D(LY) | D(LY) |