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 ?
According to Reuters, ratings agencies have opined that reinsurance rates are likely to increase in 2019.
Nothing new there, of course: as the author of this book notes, the ratings agencies have been subjected to criticisms, including 'regulatory capture', ever since they began.
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.
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 three main ratings agencies are Standard & Poor, Fitch and Moody's.
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.
Although there are other ratings agencies, these three have legal standing in the US where many fund managers use the ratings to select "investment grade" debt that offers good chance of repayment.
The credit ratings agencies are again angering governments, but this time they are taking on the big fish of the world economy.
The market for these investment products dried up and investors watched as the ratings agencies finally slashed credit ratings.
Once a country finds itself in Greece's position, it is at the mercy of the ratings agencies, which will always find justification for downgrading.
With the passage of the Banking Act of 1935, the Federal government formally enmeshed the ratings agencies with the regulation of banks.
The downgrade is not as severe as that suffered by Greece, whose debt rating was lowered to junk status by several ratings agencies earlier in this year.