Who rates Credit Rating Agencies? Apparently nobody does. Who rates Moody’s? Standard & Poor’s? Probably not. And who rates Fitch? Moody’s? Unlikely. It is not easy to rate them all as only Moody’s is the only publicly listed one of the Big Three (NYSE:MCO). Standard & Poor’s is an LLC subsidiary of S&P Global, Fitch … More Rating a Rating Agency. We’ve Rated Moody’s.
Is a triple-A rating reliable? In some cases it is. In many cases it is not. Remember a few illustrious examples from 2008? As we know, a triple-A rating – indicating a prime investment-grade financial product or borrower – is issued when the corresponding Probability of Default (PoD) is judged to be very low. It … More Getting Insurance for Triple-A Ratings
Q: What is Resistance to Shocks (RtS)? A: Resistance to Shocks is the capability of a business, a portfolio or a fund, to withstand disruptive and destabilising events in the markets, in the economy and in the geopolitical scenario. Q: How many RtS rating classes are there? A: Conventional ratings have between 20 to 30 … More A Flash Interview with Universal Ratings’ Chairman
Correlations are present everywhere. The concept of correlation is one of the key constructs of statistics, modelling, simulation. It is used to design portfolios, to estimate risks, to perform VaR analysis, compute Probabilities of Default, etc. A correlation expresses how strongly two variable are interdependent. It is therefore of paramount importance to measure correlations correctly. … More The Dangers of Linear Correlation
What information do you look for when you decide to buy or sell a security? You basically look for expert’s buy/sell advice. Today, there is another piece of information which can be helpful: complexity. Knowing if you are purchasing a complex (or a simple) product has many obvious advantages. To that end, we have launched … More How Complex are Publicly Traded Securities?
DBRS, a Canadian rating agency, has recently downgraded Italy to BBB, removing the country’s last ‘A’. In the meantime, Moody’s has just been fined, yet again, this time US$ 864 million for “inflated ratings to risky mortgage investments in the years leading up to the financial crisis”. Last year, S&P paid US$ 1.5 billion in … More Politics and Ratings. The Empire Strikes Again.
An article published in the New York Times in January 2016, states : “The veracity of China’s economic data has been increasingly questioned as the slowing pace of the country’s growth has startled the world. And a new investigation into the official who oversees the numbers is unlikely to inspire confidence.” In the light of … More US vs. China and the Balance Sheet Credibility Index
Manipulation of Balance Sheets may have its advantages if uncovered. Credit Rating Agencies use Balance Sheets to come up with their ratings (‘come up’ and not compute as ratings, according to CRAs are opinions) which means that cooked books can get you a better rating. Public companies manipulate their Balance Sheets to look good on … More Uncovering Balance Sheet Manipulation
The search for early warning signs is one of the key issues for decision makers, managers and investors. The advantages of knowing in advance the evolution towards critical situations are obvious. Complexity is a new and powerful indicator that quantifies the degree of sophistication and governability of a business and which impacts its Resistance to … More Complexity-based Identification of Defaulting Companies
The two most important events of this year are the Brexit and the election of the President of the US. In the case of the Brexit, predictions were indicating a clear ‘yes’ while the result was a ‘no’. In the case of US elections, Clinton was going to win. Not only she lost, Trump won … More Trump, Brexit and the Failure of Predictive Analytics