Understanding and Managing the Credit Rating Agencies

This brand new book is a unique first-time explanation of the business and inner workings of the credit ratings industry. The book opens up previously undisclosed areas of information that will make issuers smarter participants in the ratings game. It will help them achieve their "optimal" rating by becoming familiar with the layout of the pitch, by learning how the agencies think and operate, how their business principles guide their processes, and the role of information asymmetry and secrecy. Without understanding the rating agencies' goals, assumptions and processes, an issuer's rating will not be optimal, and cost-effective funding may not be achieved. The three major international rating agencies, Moody's Investors Service, Standard & Poor's Ratings Services and Fitch Ratings, dominate the credit ratings business around the world. Given their many decades of experience, the agencies believe their set of rating procedures and methodologies are the best way to assess credit risk. They hold a number of beliefs about how companies, banks and governments should operate so that the interests of investors are protected.