Credit rating agency
A credit rating agency (CRA) is a company that assigns credit ratings for issuers of certain types of debt obligations as well as the debt instruments themselves. In some cases, the servicers of the underlying debt are also given ratings.
In most cases, the issuers of securities are companies, special purpose entities, state and local governments, non-profit organizations, or national governments issuing debt-like securities (i.e., bonds) that can be traded on a secondary market. A credit rating for an issuer takes into consideration the issuer's credit worthiness (i.e., its ability to pay back a loan), and affects the interest rate applied to the particular security being issued.
The value of such security ratings has been widely questioned after the 2007–09 financial crisis. In 2003, the U.S. Securities and Exchange Commission submitted a report to Congress detailing plans to launch an investigation into the anti-competitive practices of credit rating agencies and issues including conflicts of interest. More recently, ratings downgrades during the European sovereign debt crisis of 2010–11 have drawn criticism from the EU and individual countries.
Uses of ratings 
Credit ratings are used by investors, issuers, investment banks, broker-dealers, and governments. For investors, credit rating agencies increase the range of investment alternatives and provide independent, easy-to-use measurements of relative credit risk; this generally increases the efficiency of the market, lowering costs for both borrowers and lenders. This in turn increases the total supply of risk capital in the economy, leading to stronger growth. It also opens the capital markets to categories of borrower who might otherwise be shut out altogether: small governments, startup companies, hospitals, and universities.
Ratings use by bond issuers 
Issuers rely on credit ratings as an independent verification of their own credit-worthiness and the resultant value of the instruments they issue. In most cases, a significant bond issuance must have at least one rating from a respected CRA for the issuance to be successful (without such a rating, the issuance may be under-subscribed or the price offered by investors too low for the issuer's purposes).
Issuers also use credit ratings in certain structured finance transactions. For example, a company with a very high credit rating wishing to undertake a particularly risky research project could create a legally separate entity with certain assets that would own and conduct the research work. This "special purpose entity" would then assume all of the research risk and issue its own debt securities to finance the research. The SPE's credit rating likely would be very low, and the issuer would have to pay a high rate of return on the bonds issued.
However, this risk would not lower the parent company's overall credit rating because the SPE would be a legally separate entity. Conversely, a company with a low credit rating might be able to borrow on better terms if it were to form an SPE and transfer significant assets to that subsidiary and issue secured debt securities. That way, if the venture were to fail, the lenders would have recourse to the assets owned by the SPE. This would lower the interest rate the SPE would need to pay as part of the debt offering.
The same issuer also may have different credit ratings for different bonds. This difference results from the bond's structure, how it is secured, and the degree to which the bond is subordinated to other debt. Many larger CRAs offer "credit rating advisory services" that essentially advise an issuer on how to structure its bond offerings and SPEs so as to achieve a given credit rating for a certain debt tranche. This creates a potential conflict of interest, of course, as the CRA may feel obligated to provide the issuer with that given rating if the issuer followed its advice on structuring the offering. Some CRAs avoid this conflict by refusing to rate debt offerings for which its advisory services were sought.
Ratings use by government regulators 
Regulators use credit ratings as well, or permit ratings to be used for regulatory purposes. For example, under the Basel II agreement of the Basel Committee on Banking Supervision, banking regulators can allow banks to use credit ratings from certain approved CRAs (called "ECAIs", or "External Credit Assessment Institutions") when calculating their net capital reserve requirements. In the United States, the Securities and Exchange Commission (SEC) permits investment banks and broker-dealers to use credit ratings from "Nationally Recognized Statistical Rating Organizations" (NRSRO) for similar purposes. The idea is that banks and other financial institutions should not need keep in reserve the same amount of capital to protect the institution against (for example) a run on the bank, if the financial institution is heavily invested in highly liquid and very "safe" securities (such as U.S. government bonds or short-term commercial paper from very stable companies).
CRA ratings are also used for other regulatory purposes as well. The US SEC, for example, permits certain bond issuers to use a shortened prospectus form when issuing bonds if the issuer is older, has issued bonds before, and has a credit rating above a certain level. SEC regulations also require that money market funds (mutual funds that mimic the safety and liquidity of a bank savings deposit, but without Federal Deposit Insurance Corporation insurance) comprise only securities with a very high NRSRO rating. Likewise, insurance regulators use credit ratings to ascertain the strength of the reserves held by insurance companies.
In 2008, the US SEC voted unanimously to propose amendments to its rules that would remove credit ratings as one of the conditions for companies seeking to use short-form registration when registering securities for public sale.
This marks the first in a series of upcoming SEC proposals in accordance with Dodd–Frank to remove references to credit ratings contained within existing Commission rules and replace them with alternative criteria.
Under both Basel II and SEC regulations, not just any CRA's ratings can be used for regulatory purposes. (If this were the case, it would present a moral hazard). Rather, there is a vetting process of varying sorts. The Basel II guidelines (paragraph 91, et al.), for example, describe certain criteria that bank regulators should look to when permitting the ratings from a particular CRA to be used. These include "objectivity," "independence," "transparency," and others. Banking regulators from a number of jurisdictions have since issued their own discussion papers on this subject, to further define how these terms will be used in practice. (See The Committee of European Banking Supervisors Discussion Paper, or the State Bank of Pakistan ECAI Criteria).
In the United States, since 1975, NRSRO recognition has been granted through a "No Action Letter" sent by the SEC staff. Following this approach, if a CRA (or investment bank or broker-dealer) were interested in using the ratings from a particular CRA for regulatory purposes, the SEC staff would research the market to determine whether ratings from that particular CRA are widely used and considered "reliable and credible." If the SEC staff determines that this is the case, it sends a letter to the CRA indicating that if a regulated entity were to rely on the CRA's ratings, the SEC staff will not recommend enforcement action against that entity. These "No Action" letters are made public and can be relied upon by other regulated entities, not just the entity making the original request. The SEC has since sought to further define the criteria it uses when making this assessment, and in March 2005 published a proposed regulation to this effect.
On September 29, 2006, US President George W. Bush signed into law the Credit Rating Reform Act of 2006. This law requires the US Securities and Exchange Commission to clarify how NRSRO recognition is granted, eliminates the "No Action Letter" approach and makes NRSRO recognition a Commission (rather than SEC staff) decision, and requires NRSROs to register with, and be regulated by, the SEC. Standard & Poor's protested the Act on the grounds that it is an unconstitutional violation of freedom of speech. In the Summer of 2007 the SEC issued regulations implementing the act, requiring rating agencies to have policies to prevent misuse of nonpublic information, disclosure of conflicts of interest and prohibitions against "unfair practices".
Recognizing CRAs' role in capital formation, some governments have attempted to jump-start their domestic rating-agency businesses with various kinds of regulatory relief or encouragement. This may, however, be counterproductive, if it dulls the market mechanism by which agencies compete, subsidizing less-capable agencies and penalizing agencies that devote resources to higher-quality opinions.
Ratings use in structured finance 
Credit rating agencies may also play a key role in structured financial transactions. Unlike a "typical" loan or bond issuance, where a borrower offers to pay a certain return on a loan, structured financial transactions may be viewed as either a series of loans with different characteristics, or else a number of small loans of a similar type packaged together into a series of "buckets" (with the "buckets" or different loans called "tranches"). Credit ratings often determine the interest rate or price ascribed to a particular tranche, based on the quality of loans or quality of assets contained within that grouping.
Companies involved in structured financing arrangements often consult with credit rating agencies to help them determine how to structure the individual tranches so that each receives a desired credit rating. For example, a firm may wish to borrow a large sum of money by issuing debt securities. However, the amount is so large that the return investors may demand on a single issuance would be prohibitive. Instead, it decides to issue three separate bonds, with three separate credit ratings—A (medium low risk), BBB (medium risk), and BB (speculative) (using Standard & Poor's rating system).
The firm expects that the effective interest rate it pays on the A-rated bonds will be much less than the rate it must pay on the BB-rated bonds, but that, overall, the amount it must pay for the total capital it raises will be less than it would pay if the entire amount were raised from a single bond offering. As this transaction is devised, the firm may consult with a credit rating agency to see how it must structure each tranche—in other words, what types of assets must be used to secure the debt in each tranche—in order for that tranche to receive the desired rating when it is issued.
There has been criticism in the wake of large losses in the collateralized debt obligation (CDO) market that occurred despite being assigned top ratings by the CRAs. For instance, losses on $340.7 million worth of CDOs issued by Credit Suisse Group added up to about $125 million, despite being rated AAA or Aaa by Standard & Poor's, Moody's Investors Service and Fitch Group
The rating agencies respond that their advice constitutes only a "point in time" analysis, that they make clear that they never promise or guarantee a certain rating to a tranche, and that they also make clear that any change in circumstance regarding the risk factors of a particular tranche will invalidate their analysis and result in a different credit rating. In addition, some CRAs do not rate bond issuances upon which they have offered such advice.
Complicating matters, particularly where structured finance transactions are concerned, the rating agencies state that their ratings are opinions (and as such, are protected free speech, granted to them by the "personhood" of corporations) regarding the likelihood that a given debt security will fail to be serviced over a given period of time, and not an opinion on the volatility of that security and certainly not the wisdom of investing in that security. In the past, most highly rated (AAA or Aaa) debt securities were characterized by low volatility and high liquidity—in other words, the price of a highly rated bond did not fluctuate greatly day-to-day, and sellers of such securities could easily find buyers.
However, structured transactions that involve the bundling of hundreds or thousands of similar (and similarly rated) securities tend to concentrate similar risk in such a way that even a slight change on a chance of default can have an enormous effect on the price of the bundled security. This means that even though a rating agency could be correct in its opinion that the chance of default of a structured product is very low, even a slight change in the market's perception of the risk of that product can have a disproportionate effect on the product's market price, with the result that an ostensibly AAA-rated security can collapse in price even without there being any default (or significant chance of default). This possibility raises significant regulatory issues because the use of ratings in securities and banking regulation (as noted above) assumes that high ratings correspond with low volatility and high liquidity.
Credit rating agencies have been subject to the following criticisms:
- Credit rating agencies do not downgrade companies promptly enough. For example, Enron's rating remained at investment grade four days before the company went bankrupt, despite the fact that credit rating agencies had been aware of the company's problems for months. Or, for example, Moody's gave Freddie Mac's preferred stock the top rating until Warren Buffett talked about Freddie on CNBC and on the next day Moody's downgraded Freddie to one tick above junk bonds. Some empirical studies have documented that yield spreads of corporate bonds start to expand as credit quality deteriorates but before a rating downgrade, implying that the market often leads a downgrade and questioning the informational value of credit ratings. This has led to suggestions that, rather than rely on CRA ratings in financial regulation, financial regulators should instead require banks, broker-dealers and insurance firms (among others) to use credit spreads when calculating the risk in their portfolio.
- Large corporate rating agencies have been criticized for having too familiar a relationship with company management, possibly opening themselves to undue influence or the vulnerability of being misled. These agencies meet frequently in person with the management of many companies, and advise on actions the company should take to maintain a certain rating. Furthermore, because information about ratings changes from the larger CRAs can spread so quickly (by word of mouth, email, etc.), the larger CRAs charge debt issuers, rather than investors, for their ratings. This has led to accusations that these CRAs are plagued by conflicts of interest that might inhibit them from providing accurate and honest ratings. At the same time, more generally, the largest agencies (Moody's and Standard & Poor's) are often seen as promoting a narrow-minded focus on credit ratings, possibly at the expense of employees, the environment, or long-term research and development. These accusations are not entirely consistent: on one hand, the larger CRAs are accused of being too cozy with the companies they rate, and on the other hand they are accused of being too focused on a company's "bottom line" and unwilling to listen to a company's explanations for its actions..
- While often accused of being too close to company management of their existing clients, CRAs have also been accused of engaging in heavy-handed "blackmail" tactics in order to solicit business from new clients, and lowering ratings for those firms . For instance, Moody's published an "unsolicited" rating of Hannover Re, with a subsequent letter to the insurance firm indicating that "it looked forward to the day Hannover would be willing to pay". When Hannover management refused, Moody's continued to give Hannover Re ratings, which were downgraded over successive years, all while making payment requests that the insurer rebuffed. In 2004, Moody's cut Hannover's debt to junk status, and even though the insurer's other rating agencies gave it strong marks, shareholders were shocked by the downgrade and Hannover lost $175 million USD in market capitalization.
- The lowering of a credit score by a CRA can create a vicious cycle and self-fulfilling prophecy, as not only interest rates for that company would go up, but other contracts with financial institutions may be affected adversely, causing an increase in expenses and ensuing decrease in credit worthiness. In some cases, large loans to companies contain a clause that makes the loan due in full if the companies' credit rating is lowered beyond a certain point (usually a "speculative" or "junk bond" rating). The purpose of these "ratings triggers" is to ensure that the bank is able to lay claim to a weak company's assets before the company declares bankruptcy and a receiver is appointed to divide up the claims against the company. The effect of such ratings triggers, however, can be devastating: under a worst-case scenario, once the company's debt is downgraded by a CRA, the company's loans become due in full; since the troubled company likely is incapable of paying all of these loans in full at once, it is forced into bankruptcy (a so-called "death spiral"). These rating triggers were instrumental in the collapse of Enron. Since that time, major agencies have put extra effort into detecting these triggers and discouraging their use, and the U.S. Securities and Exchange Commission requires that public companies in the United States disclose their existence.
- Agencies are sometimes accused of being oligopolists, because barriers to market entry are high and rating agency business is itself reputation-based (and the finance industry pays little attention to a rating that is not widely recognized). Of the large agencies, only Moody's is a separate, publicly held corporation that discloses its financial results without dilution by non-ratings businesses, and its high profit margins (which at times have been greater than 50 percent of gross margin) can be construed as consistent with the type of returns one might expect in an industry which has high barriers to entry.
- Credit Rating Agencies have made errors of judgment in rating structured products, particularly in assigning AAA ratings to structured debt, which in a large number of cases has subsequently been downgraded or defaulted. The actual method by which Moody's rates CDOs has also come under scrutiny. If default models are biased to include arbitrary default data and "Ratings Factors are biased low compared to the true level of expected defaults, the Moody’s [method] will not generate an appropriate level of average defaults in its default distribution process. As a result, the perceived default probability of rated tranches from a high yield CDO will be incorrectly biased downward, providing a false sense of confidence to rating agencies and investors." Little has been done by rating agencies to address these shortcomings indicating a lack of incentive for quality ratings of credit in the modern CRA industry. This has led to problems for several banks whose capital requirements depend on the rating of the structured assets they hold, as well as large losses in the banking industry. AAA rated mortgage securities trading at only 80 cents on the dollar, implying a greater than 20% chance of default, and 8.9% of AAA rated structured CDOs are being considered for downgrade by Fitch, which expects most to downgrade to an average of BBB to BB-. These levels of reassessment are surprising for AAA rated bonds, which have the same rating class as US government bonds. Most rating agencies do not draw a distinction between AAA on structured finance and AAA on corporate or government bonds (though their ratings releases typically describe the type of security being rated). Many banks, such as AIG, made the mistake of not holding enough capital in reserve in the event of downgrades to their CDO portfolio. The structure of the Basel II agreements meant that CDOs capital requirement rose 'exponentially'. This made CDO portfolios vulnerable to multiple downgrades, essentially precipitating a large margin call. For example under Basel II, a AAA rated securitization requires capital allocation of only 0.6%, a BBB requires 4.8%, a BB requires 34%, whilst a BB(-) securitization requires a 52% allocation. For a number of reasons (frequently having to do with inadequate staff expertise and the costs that risk management programs entail), many institutional investors relied solely on the ratings agencies rather than conducting their own analysis of the risks these instruments posed. (As an example of the complexity involved in analyzing some CDOs, the Aquarius CDO structure has 51 issues behind the cash CDO component of the structure and another 129 issues that serve as reference entities for $1.4 billion in CDS contracts for a total of 180. In a sample of just 40 of these, they had on average 6500 loans at origination. Projecting that number to all 180 issues implies that the Aquarius CDO has exposure to about 1.2 million loans.) Pimco founder William Gross urged investors to ignore rating agency judgments, describing the agencies as "an idiot savant with a full command of the mathematics, but no idea of how to apply them."
- Many of the structured financial products that they were responsible for rating, consisted of lower quality 'BBB' rated loans, but were, when pooled together into CDOs, assigned an AAA rating. The strength of the CDO was not wholly dependent on the strength of the underlying loans, but in fact the structure assigned to the CDO in question. CDOs are usually paid out in a 'waterfall' style fashion, where income received gets paid out first to the highest tranches, with the remaining income flowing down to the lower quality tranches i.e. <AAA. CDOs were typically structured such that AAA tranches which were to receive first lien (claim) on the BBB rated loans cash flows, and losses would trickle up from the lowest quality tranches first. Cash flow was well insulated even against heavy levels of home owner defaults. Credit rating agencies only accounted for a ~5% decline in national housing prices at worst, allowing for a confidence in rating the many of these CDOs that had poor underlying loan qualities as AAA. It did not help that an incestuous relationship between financial institutions and the credit agencies developed such that, banks began to leverage the credit ratings off one another and 'shop' around amongst the three big credit agencies until they found the best ratings for their CDOs. Often they would add and remove loans of various quality until they met the minimum standards for a desired rating, usually, AAA rating. Often the fees on such ratings were $300,000–500,000, but ran up to $1 million.
- It has also been suggested that the credit agencies are conflicted in assigning sovereign credit ratings since they have a political incentive to show they do not need stricter regulation by being overly critical in their assessment of governments they regulate.
As part of the Sarbanes-Oxley Act of 2002, Congress ordered the U.S. SEC to develop a report, titled "Report on the Role and Function of Credit Rating Agencies in the Operation of the Securities Markets" detailing how credit ratings are used in U.S. regulation and the policy issues this use raises. Partly as a result of this report, in June 2003, the SEC published a "concept release" called "Rating Agencies and the Use of Credit Ratings under the Federal Securities Laws" that sought public comment on many of the issues raised in its report. Public comments on this concept release have also been published on the SEC's website.
In December 2004, the International Organization of Securities Commissions (IOSCO) published a Code of Conduct for CRAs that, among other things, is designed to address the types of conflicts of interest that CRAs face. All of the major CRAs have agreed to sign on to this Code of Conduct and it has been praised by regulators ranging from the European Commission to the U.S. Securities and Exchange Commission.
Oligopoly produced by regulation 
According to professor Frank Partnoy, the regulation of CRAs by the Securities and Exchange Commission (SEC) and the FED has eliminated competition between CRAs and practically forced market participants to use the services of the three big agencies, Standard and Poor's, Moody's and Fitch.
SEC Commissioner Kathleen Casey has said that these CRAs have acted much like Fannie Mae, Freddie Mac and other companies that dominate the market because of government actions. When the CRAs gave ratings that were "catastrophically misleading, the large rating agencies enjoyed their most profitable years ever during the past decade."
To solve this problem, Ms. Casey proposed to remove the NRSRO rules completely. Also professor Lawrence White (NYU) has made the same proposition. Professor Frank Partnoy suggests that the regulators should trust in credit risk swap markets instead of NRSROs.
The CRAs have made competing suggestions that would, instead, add further regulations that would make market entrance even more expensive than it is now.
Regulatory reliance on credit ratings 
Think-tanks such as the World Pensions Council have argued that European powers such as France and Germany pushed dogmatically and naively for the adoption of the so-called “Basel II recommendations”, adopted in 2005, transposed in European Union law through the Capital Requirements Directive (CRD), effective since 2008. In essence, they forced European banks, and, more importantly, the European Central Bank itself when gauging the solvency of financial institutions, to rely more than ever on standardized assessments of credit risk marketed by two private US agencies—Moody’s and Standard & Poor's, thus using public policy and ultimately taxpayers’ money to strengthen an anti-competitive duopolistic industry.
The Big Three 
The Big Three credit rating agencies are Standard & Poor's, Moody's Investors Service, and Fitch Ratings. Moody's and Standard & Poor's each control about 40 percent of the market. Third-ranked Fitch Ratings, which has about a 14 percent market share, sometimes is used as an alternative to one of the other majors.
Business models 
Credit rating agencies generate revenue from a variety of activities related to the production and distribution of credit ratings. The sources of the revenue are generally the issuer of the securities or the investor. Most agencies operate under one or a combination of business models: the subscription model and the issuer-pays model. However, agencies may offer additional services using a combination of business models.
Under the subscription model, the credit rating agency does not make its ratings freely available to the market, so investors pay a subscription fee for access to ratings. This revenue provides the main source of agency income, although agencies may also provide other types of services. Under the issuer-pays model, agencies charge issuers a fee for providing credit rating assessments. This revenue stream allows issuer-pays credit rating agencies to make their ratings freely available to the broader market, especially via the Internet.
The subscription approach was the prevailing business model until the early 1970s, when Moody's, Fitch, and finally Standard & Poor's adopted the issuer-pays model. Several factors contributed to this transition, including increased investor demand for credit ratings, and widespread use of information sharing technology—such as fax machines and photocopiers—which allowed investors to freely share agencies’ reports and undermined demand for subscriptions. Today, eight of the nine nationally recognized statistical rating organizations (NRSRO) use the issuer-pays model, only Egan-Jones maintains an investor subscription service. Smaller, regional credit rating agencies may use either model. For example, China's oldest rating agency, Chengxin Credit Management Co., uses the issuer-pays model, while ratings from the Beijing-based Dagong Global Credit Rating are unsolicited.
Critics argue that the issuer-pays model creates a potential conflict of interest because the agencies are paid by the organizations whose debt they rate. However, the subscription model is also seen to have disadvantages, as it restricts the ratings' availability to paying investors. Issuer-pays CRAs have argued that subscription-models can also be subject to conflicts of interest due to pressures from investors with strong preferences on product ratings. In 2010 Lace Financials, a subscriber-pays agency later acquired by Kroll Ratings, was fined by the SEC for violating securities rules to the benefit of its largest subscriber.
A 2009 World Bank report proposed a "hybrid" approach in which issuers who pay for ratings are required to seek additional scores from subscriber-based third parties. Other proposed alternatives include a "public-sector" model in which national governments fund the rating costs, and an "exchange-pays" model, in which stock and bond exchanges pay for the ratings. Crowd-sourced, collaborative models such as Wikirating have been suggested as an alternative to both the subscription and issuer-pays models, although it is a recent development as of the 2010, and not yet widely used.
See also 
- Teather, David (28 January 2003). "SEC seeks rating sector clean-up | Business". London: The Guardian. Retrieved 10 May 2009.
- "SEC Proposes First in Series of Rule Amendments to Remove References to Credit Ratings". SEC. February 9, 2011. Retrieved April 18, 2013.
- "Part 2: The First Pillar—Minimum Capital Requirements" (pdf). Basel II: International Convergence of Capital Measurement and Capital Standards: A Revised Framework. Bank for International Settlements. November 2005. Retrieved April 18, 2013.
- Leone, Marie (2 October 2006). "Bush Signs Rating Agency Reform Act". CFO (Magazine). Retrieved 9 May 2009.
- Jonathan S. Sack and Stephen M. Juris (2007). "Rating Agencies: Civil Liability Past and Future" (PDF). New York Law Journal 238 (88). Retrieved 9 May 2009.
- Tomlinson, Richard; Evans, David (1 June 2007). "CDOs mask huge subprime losses, abetted by credit rating agencies". International Herald Tribune.
- Borrus, Amy (8 April 2002). "The Credit-Raters: How They Work and How They Might Work Better". BusinessWeek.
- Wyatt, Edward (8 February 2002). "Credit Agencies Waited Months to Voice Doubt About Enron" (– Scholar search).[dead link]
- Associated Press (August 22, 2008). "Freddie Mac courts investors, Buffett passes". International Herald Tribune via Internet Archive. Retrieved August 6, 2011.
- See, variously, Kliger, D. and O. Sarig (2000), The Information Value of Bond Ratings, Journal of Finance, December: 2879-2902 and Galil, Koresh (2003). The quality of corporate credit rating: An empirical investigation. EFMA 2003 Helsinki Meetings. European Financial Management Association.
- Partnoy, Frank (2006). "How and why credit rating agencies are not like other gatekeepers". In R. E. Litan & Y. Fuchita. Financial gatekeepers: Can they protect investors?. Brookings Institution. p. 13. SSRN 900257.
- Klein, Alec (24 November 2004). "Credit Raters' Power Leads to Abuses, Some Borrowers Say". The Washington Post.
- "Measuring the measurers". The Economist. 31 May 2007.
- « Dagong, the new Chinese bad guy or a fair player ? », SACR, 21 mars 2012.
- Wadden IV, William "Biv" (2002). "Interpreting Moody’s Historical Default Rate Data".
- Norris, Floyd (2 November 2007). "Being Kept in the Dark on Wall Street". The New York Times. Retrieved 30 April 2010.
- Buiter, Willem (21 September 2007). "Basel II: back to the drawing board?". The Financial Times.
- Kerr, Duncan (15 October 2007). "Banks learn to reprice risk in post-crisis credit market". Financial News (eFinancialNews Limited). Retrieved 29 June 2012.
- "Fitch Completes Review of All Fitch-Rated SF CDOs; Places $36.8B on Rating Watch Negative". Fitch Ratings. Retrieved 10 May 2009.
- "Credit markets | CDOh no! | Economist.com". Economist.com<!. 8 November 2007. Retrieved 10 May 2009.
- "Buffett and the Ratings Cartel". The Wall Street Journal. 2 June 2010. Retrieved 21 June 2010.
- Wayne, Leslie (15 July 2009). "Calpers Sues Over Ratings of Securities". The New York Times.
- "Will Financial Reform Negatively Bias U.S. Sovereign Credit Ratings?". Thoughtsworththinking.net. May 21, 2010.
- A Triple-A Idea—Ending the rating oligopoly, Wall Street Journal, April 15, 2009
- AAA Oligopoly, The Wall Street Journal, FEBRUARY 26, 2008
- M. Nicolas J. Firzli, "A Critique of the Basel Committee on Banking Supervision" Revue Analyse Financière, Nov. 10 2011/Q2 2012, p. 64
- Klein, Alec (23 November 2004). "Smoothing the Way for Debt Markets". The Washington Post.
- "Securities and Exchange Commission: Action Needed to Improve Rating Agency Registration Program and Performance-related Disclosures" (pdf). United States Government Accountability Office. 2010. pp. 60–61.
- Gerard Caprio (2012). "Handbook of Key Global Financial Markets, Institutions, and Infrastructure". Academic Press. ISBN 0123978734.
- Lianna Brinded (38 November 2007). "Moody's to boost investor confidence with new data feed". Financial News.
- Pragyan Deb; Gareth Murphy (2009). "Credit Rating Agencies: An Alternative Model" (PDF). London School of Economics.
- "General Principles for Credit Reporting" (PDF). World Bank. September 2011. "In some countries, credit rating agencies are starting to provide other types of services, including credit reporting services."
- Stephen Foley (14 January 2013). "Issuer payment: model resistant to reform". Financial Times.
- "Issuer-pays model ensures ratings are available to the entire market". The Economic Times. 6 May 2010.
- John (Xuefeng) Jiang; Mary Harris Stanford; Yuan Xie (2012). "Does it matter who pays for bond ratings? Historical evidence" (PDF). Journal of Financial Economics.
- Katie Hunt (31 October 2012). "China ratings firms challenge US dominance". BBC.
- Norbert Gaillard (2011). "A Century of Sovereign Ratings". Springer. p. 90. ISBN 146140522X.
- Gwynneth Anderson (April 2011). "New raters enter the Fray". Treasury & Risk.
- Damien Fennell; Andrei Medvedev (November 2011). "An economic analysis of credit rating agency business models and ratings accuracy" (PDF). Financial Services Authority. p. 19.
- Jeannette Neumann; Aaron Lucchetti (6 September 2010). "Ratings Firm is Fined in Misstate Case". The Wall Street Journal.
- Jonathan Katz; Emanuel Salinas; Constantinos Stephanou (October 2009). "Credit Rating Agencies: No Easy Regulatory Solutions" (pdf). The World Bank Group.
- "Report of the Committee on Comprehensive Regulation for Credit Rating Agencies" (pdf). Securities and Exchange Board of India. December 2009.
- John Greenwood (28 January 2012). "Wiki joins rating game". Financial Post.
- Yali N'Diaye (26 November 2012). "Crowd Sourced Rating Firms Join Forces;Target SEC Registration". MNI. Deutsche Boerse Group.
Further reading 
- On the history and origins of credit agencies, see Born Losers: A History of Failure in America, by Scott A. Sandage (Harvard University Press, 2005), chapters 4–6.
- On contemporary dynamics, see Timothy J. Sinclair, The New Masters of Capital: American Bond Rating Agencies and the Politics of Creditworthiness (Ithaca, NY: Cornell University Press, 2005).
- For a description of what CRAs do in the corporate context, see IOSCO Report on the Activities of Credit Rating Agencies and IOSCO Statement of Principles Regarding the Activities of Credit Rating Agencies.
- On the limits of the current 'Issuer-pays' business model, see Kenneth C. Kettering, Securization and its discontents: The Dynamics of Financial Product Development, 29 CDZLR 1553, 60 (2008).
- For a renewed approach of CRAs business model, see Vincent Fabié, A Rescue Plan for rating Agencies, Blue Sky—New Ideas for the Obama Administration ideas.berkeleylawblogs.org.
- Frank J. Fabozzi and Dennis Vink (2009). "On securitization and over-reliance on credit ratings". Yale International Center for Finance.
- For a theoretical analysis of the impact of regulation on rating agencies' business model, see Rating Agencies in the Face of Regulation—Rating Inflation and Regulatory Arbitrage, by Opp, Christian C., Opp, Marcus M. and Harris, Milton (2010).
- "Spotlight on Nationally Recognized Statistical Rating Organizations (NRSROs)", Securities and Exchange Commission
- Securities Industry and Financial Markets Association, SIFMA
- The Risk in Credit Ratings by Markus Krebsz, Scottish Financial Risk Academy
- 5 Reasons Why S&P's Downgrade of US Debt is Flawed