Last Monday, Moody's Investors Service began rolling out new ratings for various sectors utilizing its new loss-given-default (LGD) and probability-of-default (PD) ratings.
LGD ratings are assigned to individually rated debt issues. Moody's opinion is expressed as a percentage of principal and accrued interest at the conclusion of the default, with assessments ranging from LGD1 loss anticipated to be 0-9% -- to LGD6 loss anticipated to be 90-100%. PD ratings are assigned only to issuers and not specific debt instruments, using a numeric scale, expressing the ratings agency's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations.
Mike Rowan, Moody's group managing director and co-head of corporate finance in the Americas, said the ratings agency has received a number of questions as the new ratings were rolled out and sometime this week, it will post LGD assessment reports on its Web site for subscribers to get additional information explaining the rating changes.
Rowan anticipates the rollout will be done in two-and-a-half to three weeks, but could be done as early as Friday. New reports will be issued just about every day until the rollout is complete.
As of Thursday night, Moody's had introduced new ratings for the U.S. rental company sector, the solid waste sector, the U.S. and Canadian exploration and production sector, the U.S. pharmaceutical sector, the U.S. consumer products sector, U.S. advertising and broadcasting companies and North American forest products companies. Rowan could not say which industries would be next, as final ratings committees are still taking place.