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NEW YORK (Standard & Poor's) May 6, 2008--As part of its effort to provide
greater transparency about the rating process, Standard & Poor's Ratings
Services reaffirmed and explained in detail its commitment to the goal of
rating comparability in an article published today on RatingsDirect. The
article, "Standard & Poor's Reaffirms Its Commitment To The Goal Of Comparable
Ratings Across Sectors And Outlines Related Actions," describes the actions
being taken to achieve this goal and addresses some frequently asked questions
about rating comparability raised by some market participants.
"Standard & Poor's uses the same credit rating scale across the
structured finance, corporate, and government sectors," said Cliff Griep,
Standard & Poor's executive managing director and chief credit officer. "Our
traditional rating scale has proven useful to market participants in large
part because it is designed to provide a common language for evaluating and
comparing creditworthiness. It has been our goal to provide credit ratings
that are reasonably comparable measures of credit quality, and we believe we
have achieved that goal over the years," he continued. "For example, in
assigning 'A' ratings to asset-backed securities, manufacturing firms, or
local governments, we provide our opinion that they have a comparable level of
credit risk."
Some market participants have suggested that Standard & Poor's has used
or should use different rating scales for different sectors. However, most
market participants with whom we have spoken in both formal and informal
sessions acknowledge the benefits of having a common rating scale, despite the
challenges such a scale presents. This is especially the case for those who
use ratings in their credit and investment processes. These people have
instead encouraged rating agencies to adjust their criteria to strive for
reasonably consistent credit opinions, or ratings, across sectors.
Mr. Griep said that the rating surveillance, criteria, and quality review
processes at Standard & Poor's all sustain the effort to achieve comparability
of its credit opinions.
In response to market requests, we are also exploring the expansion of
our analytical products to cover more dimensions of creditworthiness or risk,
including recovery or loss given default, volatility, liquidity, and
correlation of defaults and rating transitions. We will continue to update the
market on these and other activities in the months ahead.
The reports are available to subscribers of RatingsDirect, the real-time
Web-based source for Standard & Poor's credit ratings, research, and risk
analysis, at www.ratingsdirect.com. If you are not a RatingsDirect subscriber,
you may purchase a copy of the report by calling (1) 212-438-9823 or sending
an e-mail to research_request@standardandpoors.com. Ratings information can
also be found on Standard & Poor's public Web site at
www.standardandpoors.com; under Credit Ratings in the left navigation bar,
select Find a Rating, then Credit Ratings Search. Members of the media may
request copies of these reports by contacting the media representative
provided.
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