Coke: “Pepsi sells sugary fizzy water”
...S&P today placed Moody's A-1 short-term debt rating on CreditWatch negative, citing reports that a computer error may have caused Moody's to give Aaa ratings to debt that didn't deserve them...
...“They're starting to feed on each other,” said Janet Tavakoli, president of Chicago-based Tavakoli Structured Finance Inc, which advises banks and hedge funds...
Funnily enough, S&P awarded the same CPDO deals the same AAA ratting that Moody’s conceded, after some jostling by The Financial Times, were the result of a programming error. S&P has said that its models were correctly programmed, but still managed to assign AAA ratings to products that promised Libor + 200bps.
Moody’s Commercial Paper Rating May Be Cut, S&P Says
by Alan Goldstein and Mark Pittman
Bloomberg May 22 2008
McGraw Hill, which owns S&P, is the more diversified enterprise, and actually has long term debt rated by Moody's since 1990 (A1 on neg watch since Oct 2007 -- the P-1 CP rating is stable) and Fitch (A+ Stable).
Moody's doesn't have a lot of debt, either short term, or long term -- I'm guessing that their bonds are privately placed (probably with a quiet shadow rating). They could probably get by without a CP rating, if they did it privately.
Fitch is a Fimalac sub, and it doesn't have ratings or that much debt.
If I ran a rating agency, I would avoid debt. If I couldn't avoid that, I would do all of the debt through private placements.
At least none of them have the chutzpah to rate themselves.
Posted by: David Merkel | May 23, 2008 at 14:40