Ratings business
A lot of focus is placed on companies' credit ratings, and I wonder how much the relationship of a company and its assessor has on its final rating. I have a friend who worked in Moody's and lamented that they were quickly losing market share due to their less liberal view of credit scores in comparison to S&P. And it's a bit worrying to think of how things will change if the ratings model is flawed, but I guess we can't really tell. Changes in ratings will affect the company's stock price, corporate bonds, convertibles issued, etc...but to what extent?
2 comments:
Just interning and look, you are already talking about a new greek - change in the drivative price / change in rating. !!
Yes, rating firms are to an extend shams.Just like old equity research during the internet boom days.
Also, there are just a very few players in that area...it has to mature.
anonymous: S&P and Moody's are so established I don't see how it can be worthwhile to have a piece of the pie. I wonder if they actually contribute, in one way or another, to the subprime crisis.
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