Credit Rating Agency

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Credit Rating Agency

A company that provides investors with assessments of an investment's risk. The issuers of investments, especially debt securities, pay credit rating agencies to provide them with ratings. A high rating indicates low risk and may therefore encourage investors to buy a security. Additionally, banks may only invest in securities with a high rating from two or more credit rating agencies. The SEC recognizes 10 firms as credit rating agencies; Fitch, S&P, and Moody's are the three most prominent. However, the methods of credit ratings agencies have been subject to criticism. For example, most agencies gave high-risk mortgage-backed securities top ratings until they defaulted at the collapse of the housing bubble.
References in periodicals archive ?
Until now, insurance firms have only been able to invest foreign currency securities when they have credit ratings approved by international credit ratings agencies.
Susan Schroeder's book thoroughly examines the functions that the credit ratings agencies perform, looking from a perspective informed by heterodox economics.
London - ARC Ratings, five credit ratings agencies mainly from emerging markets, has launched a rival to the sector's main players including Fitch and Moody's.
A downgrade by one of the big three credit ratings agencies would drive up the UK's borrowing costs, potentially jeopardising the Government's deficit reduction plans, the paper said.
Other countries had been downgraded by credit ratings agencies without any "noticeable impact" in the markets, he pointed out to the Treasury Select Committee.
The compromise is as follows: credit ratings agencies must fix three dates per year when they can issue unsolicited ratings, before 31 December of the previous year, Europolitics understands.
The financial crisis has shattered the myth that the judgement of credit ratings agencies is impeccable and has brought the dangers for investors of being "blindly" and "uncritically reliant" on their findings to the forefront.
Credit ratings agencies are not necessarily credible but unfortunately the markets follow their forecasts, Nobel Prize laureate Christopher Pissarides stated today.
For some observers, credit ratings agencies are an obvious suspect.
However, the new law presents a host of new requirements and legal uncertainties that credit ratings agencies such as A.
In his new role, Boyce-Valentine will work with the banks' clients to help them optimise their financing structures and assist them in working with credit ratings agencies.
The European Securities and Markets Authority (ESMA) has pointed out that the three largest credit ratings agencies registered in the EU are not properly recording their rating decisions, voicing "concerns for the adequate recording of the main elements of the committee's analytical discussions underlying each rating action".