Case A Background to the investment case Coca lCola Amatil (GEL) is one of AsiaPacic's largest bottlers and distributors of alcoholic and nonalcoholic beverages. The majority of its products are nonalcoholic and higr in sugar. For many years, Bengal Group Limited (Bengal) has held concerns regarding headwinds om structural shis in consumer demand for healthier options and regulatory risks relating to sugar consumption and their associated impacts on corporate protability. Em has held an underweirt position in CCL across its Australian fixed income mds for a number of years, given these concerns. EEG factor which drove in the investment decision Wmsion on the company reects its Tview that the social risks around high sugar and its links to diabetes and obesity have not been priced in_to the issuer's credit spread and hence W expected CCL=s credit spreads to underperform over time. There are also regulatory risks surrounding potential imposition of sugar taxes in key markets. From a nancial perspective, CCL's credit spreads have been tigdit and= in amines, have not factored in social risks relative to similarly rated issuers. Randall; credit analysis process incorporates rndamental issuer analysis and proprietary quantitative modelling to assess mvestment opportunities. In particular= the credit selection amework focuses on four categories: 1. Business prole (such as competitive position and quality of management; 2. Financial profile (such as cash ow metrics and debt maturity schedulesl; 3. Risk factors {including regulation and funding sources); and 4. Valuation factors {such as relative value, technical and covenants strength). EEG factors are typically captured in the business prole and risk factors categories. Emails credit selection 'amework is based on an integrated credit research approach that includes considering its equity team=s research as well as internal and external ESG research. W issuer research is signicantly enhanced through collaboration with its equity teams to obtain insights from their mvestment analysis and direct company engagements, as well as discussions with Bondage head of responsible investments regarding ESG issues that are deemed material to the issuer being reviewed. This broadened research approach promotes a more dynamic process with greater awareness of market conditions. Market implications In April 201?, the soft drink bottler issued a prot warning based on volume and price pressures as its core highsugar products have struggled with dwindling demand. We investment case was further reinforced in March 24313 after CCL was downgraded om BEB- to BBB by Fitch, reecting continued deterioration in the performance of the company=s Australian business due to structural challenges (lling demand for carbonated soft drinks} and increased competition in still beverages. CCL=s credit spreads have continued to underpelforrn since this latest credit rating downgrade. Require: Discuss whether W is snccessl in considering EEG factors in credit risk management