[CPDO rating error] Moody’s ousts structured finance head, admits breaches to code of conduct
Statement from Moody’s:
NEW YORK, Jul 01, 2008 (BUSINESS WIRE) — Moody’s Investors Service, the credit rating agency unit of Moody’s Corporation (NYSE: MCO), today announced that, following a comprehensive review of its ratings process for European constant-proportion debt obligations (CPDO),
[CPDO rating error] S&P admits modelling flaw
Bloomberg reports that Standard & Poor’s has admitted to finding an error in its rating model for constant proportion debt obligations. Unlike that uncovered by the FT at Moody’s, however, the error appears to have had no “erroneous”
[CPDO rating error] Cox responds to Schumer
Chairman Christopher Cox of the SEC responds to Senator Charles Schumer’s call for Moody’s to be fined in the wake of the FT’s investigation into the rating of CPDOs.
Schumer sits on the Senate’s powerful banking,
[CPDO rating error] Moody’s hopes to put CPDO errors behind it
Via Dow Jones:
At an investor conference, an executive at Moody’s Investors Service said that the agency hired an external firm to investigate the error in CPDO analysis “to help facilitate the process and put this past us.”
[CPDO rating error] Moody’s CEO makes statement
Customers of Moody’s Corporation:
As you may be aware, there have been reports in the news media of an error in a model that Moody’s Investors Service used in certain of its ratings of European constant proportion debt obligations (CPDOs).
[CPDO rating error] Moody’s on ratings watch negative
After close of markets New York time, Standard & Poor’s put Moody’s short term debt on credit watch negative:
NEW YORK (Standard & Poor’s) May 22, 2008–Standard & Poor’s Ratings Services today placed its ‘A-1′ commercial paper rating for Moody’s Corp.
[CPDO rating error] Moody’s linkfest
Thoughts from around the blogosphere:
David Gaffen at Marketbeat
The FT reports that two of three proposed changes to methodology were instituted, but the third was not because it “did not help the rating.” (Pay no attention to the man behind the curtain.)
Felix Salmon at Market Movers
That’s a smoking gun,
[CPDO rating error] US senator Schumer’s letter to Cox
Powerful democrat US senator Chuck Schumer wrote to SEC chairman Christopher Cox on Wednesday in light of the FT’s exclusive on Moody’s flawed rating of CPDOs. Schumer, who sits on the banking, housing and urban affairs committee of the Senate,
[CPDO rating error] Buffett doesn’t blink
Even as Moody’s shares were being hammered in New York trading, The Sage of Omaha seemed unmoved by his attendant paper loss of $250m or so.
Said Warren, whose Berkshire Hathaway owns a 19.6 per cent stake in Moody’s,
[CPDO rating error] Moody’s Confirms External Review of European CPDO Rating Process (Statement)
Via BusinessWire.
Moody’s recognizes the seriousness of questions raised by today’s Financial Times article concerning the analytical models and methodologies used in our European constant-proportion debt obligation (CPDO) ratings process.
[CPDO rating error] CPDOs’ triple A failure
The FT’s investigation into Moody’s rating of CPDO has shown that:
Moodys made an error in its mathematical code used to assign a rating to CPDOs. The error was discovered in early 2007, but it appears that investors in the bonds and clients were not informed.
[CPDO rating error] A CPDO rating explainer
Constant proportion debt obligations are, in themselves, complex products, but their mathematical complexity somewhat pales in comparison to the rating agency models which were developed to judge their default risk.
[CPDO rating error] Moody’s statement to the FT
Moody’s regularly changes its analytical models and enhances its methodologies for a variety of reasons, including to reflect changing credit conditions and outlooks. In addition, Moody’s has adjusted its analytical models on the infrequent occasions that errors have been detected.
[CPDO rating error] FT Alphaville exclusive: Moody’s error gave top ratings to debt products
Moody’s awarded incorrect triple A ratings to billions of dollars worth of a type of complex debt product due to a bug in its computer models, an Financial Times investigation has discovered.
Internal Moody’s documents seen by the FT show that some senior staff within the credit agency knew early in 2007 that products rated the previous year had received top-notch triple A ratings and that,