Moody’s downgrade is good news for France 20 Nov 2012 The U.S. ratings agency has followed S&P in stripping France of its AAA status. The arguments are well known, and markets yawned. But the move will add to the pressure to plough ahead with reforms. It could even help François Hollande convince the French there’s no time to lose.
ArcelorMittal loses one battle but more lie ahead 6 Nov 2012 Moody’s was unexpectedly fast to junk the steelmaker. The financial fallout is limited. But the move underscores Arcelor’s operational and deleveraging challenge. Covenants are still tight and the time for a preventive rights issue has passed, making any future cash call harder.
Pre-crisis rating laxity still has power to shock 6 Nov 2012 An Australian court has held S&P and ABN Amro liable for investor losses on AAA-rated CPDOs sold at the height of the credit bubble. S&P will appeal. Whatever the result, the ruling exposes the interplay of cynical bankers and inept raters. Today’s watchdogs should take note.
Moody’s-S&P spats offer fix to ratings conflicts 22 Oct 2012 Moody’s has publicly trashed its rival’s work on a mortgage bond, the second such squabble in two weeks. Companies may now fear getting punished for cherry picking the most favorable rater. But that’s the best antidote yet to the ratings business’s inherent conflicts of interest.
Listen to Moody’s, not the markets on U.S. outlook 12 Sep 2012 The rating agency blew its credibility on subprime, but its sober take on U.S. finances is spot on, if obvious. Too bad Mr. Market is still on a bender, with the Fed ready to pour more drinks. The market’s complacency shouldn’t lull policymakers into a false sense of security.
Moody’s keeps euro zone bailout 2.0 on trial 31 Aug 2012 The agency’s decision to delay a potential Spanish downgrade reduces the danger of a junk rating that would spook markets. Moody’s wants to see if the new bailout-lite, complete with ECB bond buying, can revive investor confidence. That keeps Spain - and the ECB - under pressure.
Manila is pillar of Southeast Asian strength 23 Jul 2012 Upgraded forecasts from the World Bank and IMF vindicate investor enthusiasm for an economy once known as Asia’s sick man. With Philippine markets roaring, President Aquino is loosening his belt to boost infrastructure and offset slowing global growth. He can afford to do more.
Downgraded banks should rush to borrow 21 Jun 2012 Most don’t need the cash. And despite the 15 Moody’s ratings cuts - by three notches at Credit Suisse and two at Morgan Stanley - short-term funding and collateral weaknesses should have already been fixed. But jumping back into markets quickly is the best way to show up Moody’s.
Ford shakes off last vestige of deadbeat status 23 May 2012 Moody’s has given the Detroit automaker its second high-grade rating in a month. Among other things, Ford can now reclaim the blue oval trademark it pawned in 2006. The firm isn’t in perfect shape, but it is leaving a painful period behind. Now it just needs to stay focused.
Japan’s debt pits economists against investors 23 May 2012 Fitch’s Japanese downgrade makes sense in economist-world, where more sovereign debt is always bad. Investors live in another place, where prices rise because people have to buy something. The two universes mostly co-exist peacefully. That could change any time.
India no longer deserves a credit upgrade 22 May 2012 New Delhi is lobbying Fitch to say it’s more creditworthy, arguing that foreign inflows protect it from a persistent current account gap. The tumbling rupee says otherwise. With slowing growth likely to keep government debt high, the risk is that those inflows go the other way.
Moody’s shows UK needs more austerity, not less 14 Feb 2012 The rating agency may downgrade the UK because of much weaker growth prospects. The government’s critics will demand less austerity. But the UK is still spending 120 bln stg more than its tax take. Policy is right. A downgrade looks unjustified provided the UK keeps cutting.
Rating agency reform needs some comic relief 24 Jan 2012 Funny man-turned-Senator Al Franken’s idea to randomly appoint firms to rate U.S. asset-backed bonds is starting to look attractive again. It can’t be worse than recently adopted rules which neither killed gaming the system nor prompted firms to offer extra unsolicited ratings.
France is capable of wasting a good ratings crisis 17 Jan 2012 Paris has been humbled by losing its triple-A. The chastened country will play second fiddle to über-leader Germany in the euro zone. The setback could be seized as an opportunity to address economic weaknesses and poor prospective growth. But not in this world.
Austria’s problem is more Ireland than Italy 16 Jan 2012 S&P’s downgrade of the country’s AAA rating does not reflect problems in the economy. The current account is in surplus and deficit and debt levels moderate. But Austria’s banks peddled unsound foreign currency mortgages at home and abroad. The country is paying the price.
Hugo Dixon: Watch Athens more than S&P 16 Jan 2012 The biggest source of immediate trouble for the euro zone could be the one country S&P didn’t examine in a review that led to the downgrade of France and eight other states. Even if the short-term shoals can be navigated, the rest of the zone won’t easily get shot of Greece.
Noyer’s ratings-rage is right for wrong reason 15 Dec 2011 The Bank of France chief is enraged by the prospective downgrade of his sovereign. The UK should get snipped first, he says. The fury is excessive, but not crazy. While Britain’s creditors may face a lower risk of nominal default, they’re in more danger of default-by-inflation.
S&P warning won’t change euro zone equation 6 Dec 2011 The risk of a mass ratings downgrade won’t be the main concern of euro leaders at this week’s summit. Bond yields were already signalling some distress, and the collective threat removes some of its sting. Governments’ main problem is convincing the ECB they’re serious at last.
EU’s rating agency overhaul is more bad than good 15 Nov 2011 The European Commission rightly wants to make investors less dependent on credit ratings. But its plan to boost competition by forcing issuers to switch agencies every three years looks confused. And making credit raters liable for mistakes is hardly going to entice new entrants.