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A provider of credit ratings, research & analysis covering fixed-income securities, other debt instruments & quantitative credit risk assessment products & services & credit processing software for banks, corporations & investors in credit-sensitive asset
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CoolinDulan (92.21) Submitted: 3/25/08 5:35 PM : Start Price: $35.81 MCO Score: -21.69
The rating agencies are going to have their business models trashed by the end of this credit crisis. It is a good thing.Municipals that default once every 30 years get A-grade ratings. Packages of toxic no-doc mortgages get a AAA-rating. Most triple AAA rated debt is supposed to continue paying unabated until some perfect storm happens (i.e. 20% unemployment). In the case of foreclosures, all it took was a tick up to 1.5% deliquency to fall apart. The ratings agencies, like Moody's, are partially to blame for destroying their own credibility.As for the hard numbers, like the CEO of Moody's said in their year end report, there is no visibility forward. The credit markets have slowed tremendously in their issuance of debt. The most profitable product from a ratings company stand point is low quality mortgage securitizations. Not many of those coming down the pipeline right now.
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hattyr (86.68) Submitted: 4/10/08 7:29 AM
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was thinking the same thing, but wouldn't it be easy to change their model to a subscription-based system, independent of the issuers being rated...
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LordZ (69.33) Submitted: 4/25/08 12:11 PM
I think a company that makes it money by rating companies, and yet still manages to get it wrong, needs to go out of business. I'm sick of these idiots out of the blue deciding to down grade companies based upon outdated and non material changes.Personally I would never invest in any company involved in credit ratings and analysis.STUPID STUPID STUPIDmaybe companies need to down grade moodys to less than junk....
Drewman76 (25.78) Submitted: 5/07/08 12:27 PM
Who pays the subscription fee's?
ResearchLover (96.41) Submitted: 8/28/08 9:32 AM
Maybe the people who don't want to pay higher interest on their lower credit rated bonds, because Moody's is playing it extra safe now that everybody is watching how strict they are about giving the best ratings, so that they can pretend they were responsible all along.Oh wait, wasn't Moodys already doing that after being in the pockets of the CDO issuers?
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