Credit analysis. The goal of credit analysis is to assess an issuer's ability to satisfy its debt obligations because instruments such as corporate bonds are contracts enforceable by law. Credit analysts generally assume an issuer's willingness to pay and concentrate instead on assessing its ability to pay. The main focus in credit analysis is therefore to understand a company's ability to generate cashflow over the term of its debt obligations. Analysts assess both the credit quality of the company and the fundamentals of the industry in which the company operates. Traditional credit analysis covers the sources predictability and sustainability of cash generated by a company to service its debt obligations. Such considerations are part of a wider framework sometimes referred to as the four Cs of credit analysis. These are firstly, capacity, the ability of the borrower to service its debt. Secondly, collateral, which refers to the quality and value of the company's assets. Thirdly, covenants, which means the terms and conditions of lending agreements that are meant to protect creditors whilst giving management sufficient flexibility to operate its business on behalf of shareholders. And fourthly, character, which refers to the quality of management, the soundness of management strategy the aggressiveness of accounting policies or tax strategies and any history of wrongdoings. Most ESG factors are considered by analysts when assessing the issuer's capacity to repay debt. A whole range of ESG risks and their materiality could be considered in relation to capacity. However, environmental factors such as the risk of stranded assets whose value is impacted as a result of changes associated with the energy transition would need to be considered as part of the assessment of collateral. Governance factors, particularly ethics, quality and accountability of senior management would be considered as part of the assessment of character.