Kroll to offer credit ratings

June 1, 2010 | By Jim Kim

We've noted that the credit rating (credit rating agencies news) industry is ever so slowly attracting new competitors. The likes of KPMG (KPMG news) and PricewaterhouseCoopers (PwC news) have pondered jumping into the market, though it appears they will not. Bloomberg will offer a product via its terminals soon. And now comes news that Jules Kroll, the famed risk consulting and investigations firm, will launch an offering.

Bloomberg reports that Kroll Bond Ratings will "initially offer unpaid opinions on outstanding securities," some of which have ratings that may still be substantially too high and others that have been marked down "overly aggressively" as existing competitors respond to criticism. It intends to one-up the traditional firms like Moody's and Standard & Poor's by doing more research and relying on an advisory board that will include pensions.

The big issue in this industry is the shape of reform. If you really want to smash the industry, you would have to support measures to change the rules such that issuers no longer have to get a rating from one of the approved agencies.

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