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 ?

TOKYO - The government endorsed a bill Friday to regulate credit-rating agencies in response to criticism that their lax rating activities are partly responsible for the current financial crisis.

Kyodo economic news summary

WASHINGTON -- The Senate acted Friday to impose more oversight on the biggest credit-rating agencies, criticized by some lawmakers as unfairly dominating the field and hindering competition.

BRIEFCASE

aThe US Senate Committee on Banking, Housing and Urban Affairs is considering the possibility of legislating on credit-rating agencies.

FINANCIAL SERVICES : CREDIT-RATING AGENCIES UNDER SCRUTINY BY US CONGRESS

Two other credit-rating agencies -- Standard & Poor's Ratings Services and Moody's Investors Service -- have already lowered Ford's ratings to junk status.

Fitch downgrades Ford ratings to junk status

And there are concerns on the credit side: Critics suggest that credit-rating agencies would lower the state's bond rating if the state proceeds with the proposal (agencies don't like it when states sell off one-time assets to solve continuing budget problems).

Not so fast: critics question proposal to sell off dorms. (Update)

A REIT that hits the target is on the radar screens of more analysts; has more liquidity, which means it will attract more large institutional investors to buy its stock; and can get noticed by the credit-rating agencies and likely attain an investment-grade rating, which means its cost of capital is lower," explains Korpacz.

REITs driving prices up as property acquisitions soar

The letter was in response to one sent late April by the ministry to three Western credit-rating agencies, including Moody's, which questioned the credibility of their rating decisions and asked for further explanations.

Moody's to conclude Japan debt rating review by May 31

The four other credit-rating agencies covered by the JCIF survey were Japan Credit Rating Agency Ltd.