RSS feedMoodys
’Public opinion: rating agencies
The CFA Insitute has conducted an opinion poll on credit rating agencies. With 1,956 respondents – all, being members, qualified financial analysts – it makes for a fairly authoritative snapshot. Key findings presented below:
Moody’s to investigate staff over rating error
Moody’s, the credit rating agency, on Tuesday said it was beginning disciplinary proceedings against some of its staff as it admitted it had incorrectly rated about $1bn of complex debt securities due to a computer error.
Folly and the future of credit ratings
The WSJ reports this morning on changes to be announced Wednesday by the SEC “that may diminish the longstanding importance of credit ratings across various markets.”
Specifically, it seems, the SEC is intent on addressing the glaring shortfall at the heart of the current regulatory fudge:
EU Commissioner: time to end the “rot” at the heart of the rating agencies
Below, the speech due to be delivered imminently by EU Internal Markets Commissioner Charlie McCreevy on the credit crisis, and specifically, the role played in it by the credit rating agencies.
It’s pretty strong stuff when set against similar regulatory responses so far – such as those from IOSCO or the SEC.
[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,
Rating reform
A quick take on the latest facing the rating agencies. The first set of new regulatory proposals, released by the SEC yesterday (emphasis ours):
The Commission is proposing the rulemaking in three parts,
[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.”
Monoline flatline: S&P downgrades MBIA and Ambac
That’s it then.
NEW YORK (Standard & Poor’s) June 5, 2008–Standard & Poor’s Rating Services today lowered its financial strength ratings on Ambac Assurance Corp. and MBIA Insurance Corp. to ‘AA’ from ‘AAA’ and placed the ratings on CreditWatch with negative implications.
Tilting at windmills, rating agency edition
Finally, perhaps, just maybe… recognition that there is no way MBIA and Ambac are triple A institutions? Moody’s put both monolines on review for downgrade, which given past treatment of them both could mean anything.
Rating agencies agree to changes
The big rating agencies have agreed to change the way they charge for credit ratings in the mortgage-backed securities market to prevent “ratings shopping”, where only the highest ratings on a deal are selected and paid for.
Moody’s: UK banks can absorb house-price fall
Britain’s banks and building societies could absorb a 20% fall in UK house prices in a year without further denting their capital reserves, according to research by Moody’s to be published Friday. The finding comes as shares in the UK’s largest lenders continued to slide on Thursday,
Second-lien fallout
There’s a monoline-related barney going on.
After raising capital in February and March, temporarily easing concerns about their future, the bond insurers are back in the spotlight. First there’s the matter of accountancy - and the prospect of having to set aside money to cover losses on troubled securities earlier,
CDO watch: ratings shopping
Several CDOs are going into liquidation on Tuesday – a sign, perhaps, that senior noteholders are losing their nerve amid more signs of deterioration in MBS fundamentals, as reported by the rating agencies this week.
SEC probes credit rating agencies
The US SEC is looking into the workings of the three main credit rating agencies, prompted by their handling of the subprime crisis and a report of computer errors at Moody’s, reports Reuters. Erik Sirri,
[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.
Moody’s launches review in wake of errors
Moody’s has initiated an external review of its ratings of $4bn of complex debt products after the FT reported that the agency had awarded incorrect ratings because of a bug in its computer models. Charles Schumer,
CIFG bond insurer cut to junk rating
CIFG, a small and privately owned bond insurer, had its credit ratings downgraded to junk status on concerns over the impact of mounting writedowns related to its exposure to complex bonds backed by risky mortgages.
[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,
Moody’s errs in rating debt products
Moody’s incorrectly awarded triple-A ratings to billions of dollars worth of a type of complex debt product due to a bug in its computer models, an FT investigation has discovered. Internal Moody’s documents 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,
Moody’s fit of pique: MBIA triple-A not so triple-A
What goes up…
MBIA – which filed its quarterly results on Monday – enjoyed something of a share price bounce. Odd considering that the results, by any yardstick, were dismal. Shareholders seemed more than willing to toe the line from CEO Jay Brown:
Moody’s sticks to ratings scale
Moody’s has rebuffed calls for the credit rating agency to abandon the practice of using an alphabet-based rating scale for complex financial instruments. The agency will continue to give these instruments tags such as “triple A”,
Moody’s on negative watch
Hopefully Moody’s requires more thorough projections from its clients:
‘Up a bit, down a bit… roundabout a 60 per cent drop in our most important areas of business… or something.’
As per the rating agency’s Q1 results,
The rating on the wall
Is the tide beginning to turn against the rating agencies?
IOSCO- the International Organisation of Securities Commissions – has just published its long anticipated consultation paper on the role of the rating agencies.
Moody’s to review Sigma rating
Sigma Finance, a $40bn-plus complex debt investment vehicle run by the London-based specialist asset manager Gordian Knot, has been put on review for downgrade by Moody’s. The agency said that $27bn worth of senior short- and medium-term debt issued by Sigma,
Moody’s revenues look bleak
Moody’s, the credit rating agency, on Thursday painted a bleak picture for its ratings business amid unusually weak debt market conditions and a prolonged credit squeeze. The rating agency said it expected full-year revenues for 2008 to decline in the “low double-digit per cent range”,