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rating agencies and their credit ratings
what they are, how they work and why they are relevant
1 online resource (xiv, 510 pages) : illustrations
Credit rating agencies play a critical role in capital markets, guiding the asset allocation of institutional investors as private capital moves freely around the world in search of the best trade-off between risk and return. However, they have also been strongly criticised for failing to spot the Asian crisis in the early 1990s, the Enron, WorldCom and Parmalat collapses in the early 2000s and finally for their ratings of subprime-related structured finance instruments and their role in the current financial crisis. This book is a guide to ratings, the ratings industry and the mechanics and e.
The Rating Agencies and their Credit Ratings; Contents; Foreword; Preface; 1 Introduction; 1.1 Context and Premises; 1.1.1 The Benchmarking of Default Prospects Remains Deeply Rooted in Business Analysis; 1.1.2 Credit Ratings Play a Unique Role in Overcoming Information Asymmetries on the Information Exchanges; 1.1.3 Under the Spotlight as Unique Infomediaries, the CRAs became Strictly Regulated; 1.2 Book Chapters; 1.3 Supporting Materials; Part A Credit Rating Foundations; 2 Credit Ratings; 2.1 The World of Corporate Defaults; 2.1.1 What are Corporate Defaults?
2.1.2 The Drivers of Corporate Defaults 2.1.3 Recovery Rates from Defaults; 2.2 Credit Rating Scales; 2.2.1 Fundamental Ordinal Credit Rating Scales; 2.2.2 Rating Scales and Observed Bond Market Credit Spreads; 2.2.3 Market-Implied Cardinal Rating Scales and Default Probabilities; 2.3 The Interpretation of Credit Ratings; 2.3.1 Interpreting from the Scale; 2.3.2 Correctly Interpreting versus Misinterpreting Ratings; 2.3.3 Special Issues; 2.4 Credit Ratings: Summary and Conclusions; 3 The Raison d'Etre of Credit Ratings and their Market
3.1 Needs for Credit Ratings -- or the Demand Side of Ratings 3.1.1 Principals: Issuers/Borrowers; 3.1.2 Principals: Fixed Income Investors; 3.1.3 Prescribers; 3.2 Credit Ratings as a Solution to Information Asymmetry: Economic Analysis; 3.2.1 Economics of Ratings: Intuition; 3.2.2 Economics of Ratings: Analysis; 3.2.3 The E conomic Analysis of Ratings: Summary and Implications; 3 .3 Credit Rating Segments -- or Scale and Scope of the Rated Universe; 3.3.1 Industry Segments or Type of Rated Issuers; 3.3.2 Product Segments or Types of Rated Issues
3.3.3 Geographical Segments or Location of the Obligor 3.4 Summary; 3.5 Technical Appendix; 4 How to Obtain and Maintain a Credit Rating; 4.1 The Rating Preparation; 4.1.1 The Issuer Client; 4.1.2 The Rating Adviser-Intermediary; 4.1.3 The Credit Rating Agency Supplier; 4.2 The Rating; 4.2.1 The Rating Action; 4.2.2 Rating Follow-Up; 4.2.3 The Rating Agreement; 4.3 Quality of the Rating Process; 4.3.1 Objectivity; 4.3.2 Diligence; 4.3.3 Transparency; Part B Credit Rating Analysis; 5 The France Telecom Credit Rating Cycle: 1995-2004
5.1 From Sovereign Status to Near Speculative Grade (1995-2002)5.1.1 How Sovereign Aaa Status of June 1995 Adjusts to Corporate Aa1 in July 1996; 5.1.2 A Company that went Public on Aa1 Status in October 1997 is Downgraded to Aa2 in December 1999; 5.1.3 Rapid Extension of FT's Reach and Two Notches Downgrade to A1 in September 2000; 5.1.4 A Wake-up Call: the Orange IPO and Surprise Two Notches Downgrade to A3 in February 2001; 5.1.5 The Slide Downward to Baa1 in September 2001; 5.1.6 Looming Crisis and Two Notches Downgrade to Baa3 in June 2002
Herwig M. Langohr and Patricia T. Langohr.
Includes bibliographical references and index.
Chichester, West Sussex, England ; Hoboken, NJ : John Wiley, ©2008
B6DF5CAD-5357-4FA9-B582-F30F59D368F1 OverDrive, Inc.