Posts tagged 'Credit Rating Agencies'

Raters’ sovereign bias, a new rebuke

Another salvo arrives in the intellectual spat over whether or not credit rating agency opinions have been subject to country bias, possibly influencing Europe’s debt crisis.

After we featured a strongly worded piece by the Unicredit economist team in March, IPE magazine asked them to turn it into an article.

IPE asked for responses from the three big agencies. Fitch again declined, S&P replied along the lines of the one given to us, while Moody’s decided to comment specifically on the Unicredit paper.

We’ll sample the arguments below, but in preview Erik Nielsen is not impressed and has dared the rating agencies to meet in front of regulators and or academic specialists to compare notes. Watch this space. Read more

Ratings bias slap-back smackdown watch

So, after we wrote about a paper by two economists at the University of Heidelberg that attempted to discern an empirical basis for accusations of bias in rating agency opinions, Standard & Poor’s fought back.

The rater, you will recall, did not like the suggestion that its rating on the US should have been a notch lower if it was to be consistent, suggesting a bias towards its home country. Andreas Fuchs and Kai Gehring’s algorithm did not pick up the subtleties of the ratings process, you see. Read more

You’ve been Dagonged, debt-ceiling edition

Why might Dagong — the rising rating agency from a country holding a massive amount of Treasuries — be so annoyed with the United States?

It’s downgraded the US to A- from A — on a par with Dagong’s Brazil and Panama sovereign ratings. (And it appears to have caused a kneejerk reaction in gold and the dollar early on Thursday.) Read more

Subprime securities – still being downgraded

If you woke up on June 10, 2013 and thought the subprime securities crisis was behind us, well, you were wrong.

Some two weeks ago Moody’s announced it was downgrading 28 tranches of various bonds (as well as upgrading two tranches, and confirming others) in an action that covered roughly $1.2bn worth of mortgage-backed securities (MBS). Read more

A Cypriot seniority quirk?

S&P has downgraded (to B from BB) Cyprus, the little island which is facing a great big bank recapitalisation bill from the fallout in Greece. It could well be the biggest ever such bill in history, relative to GDP.* Read more