The Probability of Holdings’ Default Calculated Based on the LDP Models as the Basis for a Low-Risk Bonds Portfolio

The aim of this dissertation is to analyse the utilisation of the international financial reporting standards to determine the companies’ credit ratings. The international credit agencies evaluate the companies' activities and financial account standards to provide a qualified assessment. This paper describes the principal methodological approach to formulating such assessment. IFRS compiles certain norms which facilitate the decision making by companies and investors in pursuing investment opportunities. This is achieved by using a special analysis which determines the probability of the impact of certain financial coefficients on credit ratings. Through this analysis, a conclusion is reached on a specific hypothesis. Based on the calculated credit rating and the adaption of the Markowitz Portfolio Theory, we embark upon the practical task of creating a low-risk bond portfolio. Bonds are considered the most effective instrument in attracting the required additional capital to achieve the required corporate objectives. Based on the analysis’ results along with their practical implementation, further methodological proposals are presented with the aim of conducting the most reliable investigation.