I briefly discussed credit ratings in my S&P write-up. It’s a great business, we all know that. But it’s also tied to issuance volume, which is highly cyclical and difficult to predict. Investors tend to dislike that kind of volatility even in deeply moated companies. Perhaps in an effort to smooth its earnings profile through […]
Category Archives: [MCO] Moody’s Corp
Banks, regulators, and fixed income investors rely on Moody’s and S&P to provide a consistent and standardized metric of credit risk across names and over time. As I explained in The Self-Reinforcing Standards Moat: …ratings underpin the risk weightings that banks attach to assets to determine capital requirements, dictate which securities a money market fund […]
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Moody’s is a Nationally Recognized Statistical Rating Organizations (NRSROs), a title bestowed by the SEC on a handful of credit rating agencies, the top 3 of whom act as an oligopoly in the US debt ratings gambit. As you well know, Moody’s (and S&P and Fitch) fell into disrepute during the last financial crisis when […]