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 ?
In the Asia-Pacific region, Standard & Poor's has been voted most influential ratings agency by Finance Asia magazine, and Ratings Agency of the Year 2001 by INSTO.
The bank rating services currently offered worldwide by BankWatch will now become part of Fitch, Fimalac's international ratings agency.
Fimalac, the diversified French operating company, today announced that its wholly-owned subsidiary Fitch, the world's third largest ratings agency, has acquired BankWatch, the leading ratings agency specializing in banks and financial institutions, from the Thomson Financial group of Canada.
Following the completion of regulatory approval, the bank rating services currently offered worldwide by BankWatch, through Thomson Financial, will become part of Fitch, Fimalac's international ratings agency.