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’Banks face bond downgrades
Many banks are facing possible multi-notch downgrades to their hybrid bonds following a change in the methodology used by Moody’s Investors Services. The ratings agency on Tuesday said it would announce within two days which hybrids would be put on review for downgrade following changes in its review system.
Banks face hike in funding costs
Banks around the world face increases in funding costs that could cut profits as they look to refinance $7,000bn-plus in short-term debt expiring in the next three years with longer-dated bonds, according to Moody’s.
Rating agencies under fresh fire
Credit rating agencies came under renewed fire on Wednesday as US lawmakers discussed new rules to make the agencies liable for each other’s mistakes. Moody’s came under particular scrutiny as two former executives told a congressional committee about concerns over how credit ratings were assigned in structured finance deals and municipal debt.
Moody’s hit by short selling
Short sellers have increased their positions in Moody’s, one of the biggest credit rating agencies, amid growing scrutiny of the sector by US lawmakers. This week, a series of Congressional hearings will consider whether the agencies require more regulation.
Se Vende
MADRID, June 16 (Reuters) – The number of houses sold in Spain fell by 47.6 percent in April compared to a year earlier, marking the largest percentage fall in 16-straight months of decline, the National Statistics Institute said on Tuesday.
Rating the first amendment
Floyd Abrams is defending the rating agencies.
Since time immemorial (well, Enron’s collapse) the rating agencies have steeled themselves against accusations of bias and mis-rating with a powerful defence:
Saad junked
In case you missed the Moody’s downgrade of Saad on Tuesday morning, here are some selected highlights. Emphasis ours:
Moody’s Investors Service has downgraded the ratings of Saad Trading Contracting & Financial Services Company (STCFSC),
The curious case of the West Brom BS
On Monday, the West Bromwich Building Society moved quickly to scotch suggestions that it had been put up for sale:
The West Brom has no knowledge of the FSA holding merger discussions relating to the society .
Moody’s cuts Korean bank ratings
Moody’s on Wednesday lowered its ratings for four South Korean lenders, including Kookmin Bank, citing rising bad loans and weak financial positions. The downgrade was part of the agency’s wider reassessment of banks globally.
Moody’s downgrades building societies
Nine UK building societies, including Nationwide, have been downgraded by Moody’s – some by as much as four notches – amid concerns about their exposure to falling house prices and specialist mortgage loans.
Switch to Fitch?
Percentage of CDOs registering events of default, by presence of agency rating:
(Chart reproduced with kind permission from a paper by Anna Katherine Barnett-Hart, Harvard)
Moody’s strips GE of AAA rating
General Electric’s financial health came under renewed focus on Monday as Moody’s stripped the group of its long-held triple-A rating and questioned GE’s pledge that its finance arm would be profitable this year.
Weekend catch-up
In case you missed these stories:
- Kirin sets sights on 49% stake in San Miguel
Kirin on Friday unveiled plans to acquire up to 49% of San Miguel Brewery in a deal that highlights the Japanese beer company’s overseas ambitions.
Eastern Europe fuels rush for safety
Fears of banking turmoil in eastern Europe on Tuesday triggered warnings that European financial institutions exposed to the region could provoke a stampede into the dollar and US bonds. The turmoil was prompted by a report from Moody’s (see separate report) which warned that west European banks with east European subsidiaries were at risk of downgrades.
Moody’s downgrades BA
British Airways has had its investment grade credit rating removed by Moody’s due to its rapidly worsening financial performance. The agency said the rating also remained under review for a further possible downgrade.
Agencies give GE breathing space
The two top credit rating firms appear willing to give General Electric every opportunity to justify its triple A ratings, long after debt investors, equity analysts and even GE’s own executives have started to brace themselves for a downgrade.
Moody’s warns on UK building societies
Some of the UK’s 55 building societies could declare losses for 2008 as they face pressure on rising impairments from UK mortgage lending and commercial property, according to Moody’s. The credit rating agency has warned in a report about the amount of capital UK mortgage lenders,
CPDOs approach cash out events
From Moody’s:
Paris, September 17, 2008 — Moody’s Investors Service today downgraded and left under review for possible downgrade 20 series of CPDO notes, static and managed.
These actions are based on significant spread widening,
Moody’s and model risk, redux
From Moody’s late yesterday:
Moody’s places certain European CPDOs under review for downgrade
Approximately 854 million EUR debt securities affected.
Paris, September 04, 2008 — This review is prompted by the identification of a coding error in a model used for monitoring CPDOs that has been in use for approximately two months.
Who needs rating agencies?
From the Economist:
Moody’s, another rating agency, says that market-implied ratings, such as those provided by CDS spreads, tally loosely with credit ratings 80% of the time. What is more, CDS spreads frequently anticipate ratings changes.
Report flags UK subprime arrears
The proportion of UK subprime mortgages falling into arrears has jumped to 10%, according to data produced by Moody’s. The latest data underlines the pressure building on UK homeowners as the economy starts to worsen and borrowers struggle to repay their mortgage loans.
Corporate debt default ‘could hit 10%’
Defaults on corporate debt are on the rise as economic weakness takes it toll on the financial health of companies. The global default rate is expected to climb to 6.3% over the next 12 months and could reach 10% should the US sink into a protracted recession,
Moody’s sees plunge in Q2 income
Moody’s warned Wednesday it expected declines in structured finance revenue of over 50%. The credit rating agency, whose biggest investor is billionaire Warren Buffett, reported a near halving of Q2 net income to $135.2m,
More companies struggle with liquidity
The number of companies with weak cash flow and limited access to capital has risen to the highest level in five years as the world economy comes under increasing strain from the deepening financial crisis.
Bond insurers face downgrade
Shares in Dexia and Assured Guaranty fell sharply Tuesday in response to a warning by Moody’s that it might cut the triple A credit ratings of their bond insurance operations. Fears of a further round