The role of credit rating agencies

Guest lecture by Brad Walters, General Manager, Financial Analytics, Corporate Scorecard held at the Australian School of Business, UNSW

Category:

Education

Tags:

• Finance
• Credit rating

[9844wp]

Hell of a job, TEABAGGERS!

[RamS66]

Is there any way we can get the powerpoint used in this presentation. Thank you.

[fidelarei]

If you want to marry an Russain women come to us gettop5.info

[stevenpat16]

OH, if you look closely @ 9:41 there's a fly on his tie!

[stevenpat16]

OMFG, who do I talk to 2 get my last 15 mins back? The guy  in the video? SIgh, BFM FML!

[phigura153]

Maybe the analysts at Moody's saw the collapse of

Lehman's and the real estate asset price bubble, and

realized that all they could do was delay the inevitable,

but that would mean false ratings. Would you tell "the

crew" that "the ship" had hit an iceberg and it was going to

"go under", or would you delay telling them, while frantically

hoping that a solution would become apparent? In the

movie, 'Schindler's List', they commit accounting fraud in

order to save life. Intent matters.

[phigura153]

Team players might be trying to throw a game.

Were bad analysts at Moody's or S&P part of

a communist conspiracy to overthrow the American

capitalist system? Were they saboteurs? White

collar terrorists? The Soviet Union fell not too long

ago. His quote of Vladimir Putin's remarks was

interesting. Putin, ex-Soviet patriot, new Russian

Premier, seems well-verse in American capitalism,

but he attended Soviet educational institutions.

[phigura153]

credit ratings are like gossip, and can affect the

reputation of a business, thereby affecting its ability

to raise financial capital, and be a "going concern",

for why would suppliers trust a manufacturer they

felt was not going to be around next year?

[phigura153]

"A credit rating to be effective must provide an adequate early warning of financial distress".

Yes, well, the static and the dynamic perspective do not

always agree with each other. So, should a credit rating

be a combination of those two factors, or do you need two

metrics: "Here is the net asset value, and it is +, or it is -,

declining or growing." Also, ratings affect the business:

A negative rating (gossip) can accelerate deteriorating

conditions in a business.