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What to make of the credit rating agencies
Do credit ratings agencies matter anymore?
This is a relevant question given that credit ratings agencies find themselves featured prominently in the news. In some ways, the on-going U.S. debt ceiling story has been a PR win for the agencies, especially Standard & Poor's, because for t
Credit rating woes still linger
A recent Reuters column carried this headline: "Rating structured bonds is impossible." It's a sentiment many would share in the wake of the CDO meltdown. Despite lots of criticism, there hasn't been a revolutionary shift in the way structure debt is rated. The big ratings agencies are still p
The de facto end of too big to fail?
The debate about too big to fail has been raging, with no end in sight. But have the credit rating agencies already made up their mind on the outcome? Standard & Poor's has revised its outlook on Bank of America ( BAC ) and Citigroup ( C ) to negative from stable. A negative outlook indica
New era of free speech for ratings agencies?
Rating agencies like Moody's and Standard & Poor's have often argued that since they merely offer an opinion on creditworthiness, they cannot be sued because they have a right to free speech. But Fortune notes a recent case in which a judge seems to be taking a skeptical, fresh look at the
The new face of credit ratings agencies?
Credit rating agency reform seems to be one of those issues that has fallen by the wayside as of late. True, the Obama Administration has put forward a proposal. The proposal, as Fortune notes, would prevent credit ratings agencies from performing consulting work for companies whose bonds they
Ratings agencies can't win
Standard & Poor's, Moody's and Fitch have all been roundly criticized for their rosy ratings of mortgage-backed-related issues. They didn't start downgrading until it was way too late. Ever sensitive to the criticism, you can't blame them for considering methodology changes to commercial mortg
Corporate debt market improves--barely
According to Standard & Poor's, more than $700 billion in corporate debt will come due in 2009--at the worst possible time. Southwest Airlines may have been among the lucky ones when it went to borrow $400 million. The terms were not exactly envious. It had to pay 10.5 percent interest and put
Cash is king on the buy side?
A lot of big-name buy-side players have moved into cash. Bloomberg reports that no less than Steven Cohen, of SAC Capital Advisors, and Paul Tudor Jones, of Tudor Investment Corp., have been selling assets to raise cash. SAC apparently is now 50 percent in cash. Other hedge funds have been doi
Short sellers vindicated?
There are lots of people who will argue that regulators made short sellers a convenient scapegoat in the recent financial gyrations. They are not without evidence. As Business Week notes, the Standard & Poor's 500-stock index fell 22 percent from Sept. 19, before the temporary short sellin
Rating agencies sued by Connecticut
It's no secret that credit ratings agencies rate municipal and corporate debt differently. Moody's has admitted as much. Exactly why they do this vexes some--including Connecticut state attorney general Ralph Blumenthal. He has sued Standard & Poor's, Moody's and Fitch, charging them with unfa
