Posts tagged 'Standard & Poors'

Working together on the CPDO dream

In the prodigiously long and detailed judgement from Australia’s Federal Court on the CPDO affair, there is a story jumping out from behind the complexity of the product itself. It’s about the key role played by former Standard & Poor’s employees who had left the rating agency to go to banks to help structure these products. Read more

Rating agencies have a funny way of agreeing about Spain

“Moody’s keeps gun pointed at Spain but does not pull trigger” was one of the more colourful headlines to come from the agency’s confirmation of the sovereign’s Baa3 rating with a negative outlook on Tuesday. A little rally in bonds and equities duly followed:

After the two notch downgrade by S&P about a week ago, both agencies now have the sovereign on equivalent ratings. It’s pretty hilarious to compare and contrast the reasons for each agency’s (in)action. Read more

Why S&P’s US warning didn’t move Treasuries

Treasury yields closed lower on the day Standard & Poors warned that it might cut the United States’ AAA rating, FT Alphaville says. That’s an indication of deflationary and liquidity trap effects in the market, as investors look to the impact on growth of deficit cutting, and also price in fewer supplies of future Treasuries for purposes of quality collateral. Other observers have different explanations. The bond market sees S&P’s action as a spur to budget discipline, Brad DeLong writes in the FT. Goldman’s Jan Hatzius argues that lower growth from austerity implies easier monetary policy, complicating Treasury yields even further, FT Alphaville adds.

S&P cuts Nevada rating

Standard & Poor’s has cut Nevada’s credit rating by one notch to double A, citing the state’s “severe economic cyclicality” and dependence on consumer spending, the FT reports. “Nevada provides an exaggerated microcosm of the national economic experience of the past several years,” S&P said. Nevada has the highest statewide unemployment rate in the country, reaching 14.9 per cent in December. Nevada’s real estate market also leads the US in the rate of home foreclosures, S&P said. The double A rating reflects Nevada’s willingness to address its budget gap in a timely fashion as well as low total debt relative to the state’s economy, the rating agency said.

Gratuitous sovereign AAA

From now on we’ll have to tell you that we practically give AAA sovereign ratings away, Standard & Poor’s said on Thursday (or something like that anyway):

Kingdom of Belgium (AA+/Negative/A-1+) Read more

About that Irish downgrade

So what was really behind Ireland’s furious reaction to this week’s S&P downgrade?

Did a looming refinancing of government guaranteed bank debt play a part? Read more

Please don’t use our credit ratings, say agencies

The Wall Street Journal reports that the country’s three main ratings agencies have declined to be used in documentation backing new bond sales due to uncertainties linked with the potential impact of the Dodd-Frank financial reform law. The move is reportedly already causing havoc in bond markets, parts of which are shutting down in response. The Journal adds the new law would make ratings firms liable for the quality of their ratings decisions. Consequently, some are holding back until they get a better understanding of their legal exposure. See FT Alphaville for more.

Carry on cutting

No let up in the austerity please, Mr Osborne. That’s pretty much the message from S&P, which reaffirmed the UK’s AAA rating on Monday but maintained its negative outlook.

For the record, a negative (or a positive) outlook from the rating agency indicates a one-in-three chance of a rating change over a period of six months to year. Read more

S&P raises fears over some banks

A study by credit rating agency Standard & Poor’s has raised questions over the financial strength of some of the biggest banks ahead of new rules that could require them to raise more funds. The analysis by S&P showed that HSBC is the world’s best capitalised bank, while Switzerland’s UBS, Citigroup of the US and several of Japan’s biggest banks are among the weakest. The ranking of 45 of the world’s top banks highlights yet again the continuing capital shortfall at some key institutions.