Category Archives: credit ratings

The Moody’s USA Downgrade

Can the yield on US Treasuries be considered the "risk free rate of return" if there are other securities which are lower-risk than US Treasuries? Moody’s now admits two things: firstly that triple-A doesn’t mean risk-free (thanks, guys, I think … Continue reading

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It’s Time for GE to Lose its Triple-A

GE’s triple-A credit rating is so important, especially now that it has been threatened by S&P, that it has overshadowed the company’s earnings this morning. But really it’s high time that GE lost the rating, which is a throwback to … Continue reading

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Iceland: When Too Big To Fail Becomes Too Big To Rescue

We know that credit ratings agencies made enormous errors over the past few years when it came to rating structured products. And of course it’s never easy to rate leveraged institutions, like banks, which are susceptible to runs. But what … Continue reading

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When Single-A Corporates Default

S&P is defending the single-A rating that Lehman had when it went bust. "In our view, Lehman LEHNG.PK had a strong franchise across its core investment banking, trading, and investment management business," analyst Scott Sprinzen said in a statement… "We … Continue reading

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How are Covered Bond Ratings Determined?

Remember covered bonds? They’re ever so safe, because not only are they overcollateralized, they’re also guaranteed by the issuing bank. As a result, Hank Paulson has been dropping hints that he’d like to see the mortgage industry move in the … Continue reading

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The Moody’s CPDO Scandal: Heads Begin to Roll

The external review of the Moody’s CPDO scandal has now been concluded, and as a result Moody’s says that it "has initiated employee disciplinary proceedings". Such proceedings, it would seem, include firing the head of structured finance, Noel Kirnon. Moody’s … Continue reading

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Annals of Pathetic CEO Communications, Moody’s Edition

When a company runs into trouble, it turns to its chairman and CEO (if they are the same person) for leadership. If that person is someone like MBIA’s Jay Brown, he provides it, showing backbone and passion and clarity of … Continue reading

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Moody’s Brings In the Lawyers

Moody’s second statement on the CPDO scandal shows – in the wake of their stock falling 16% yesterday and Chuck Schumer breathing fire – that they’re finally beginning grok just how serious it is. The first statement, you’ll recall, merely … Continue reading

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FT Story Hammers Moody’s Stock

The stock market has spoken: Moody’s shares are down 14% today in the wake of the ratings scandal uncovered by the FT. Portfolio did a good job of rounding up the reactions, including a unwisely dismissive piece by the WSJ’s … Continue reading

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A New Moody’s Rating Scandal

The FT has an explosive story today about the market in CPDOs, and the way that Moody’s, in particular, rated them. The problem is that CPDOs are so ridiculously complex that this scandal – and it is a scandal – … Continue reading

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