Moody’s forced to act as swap counterparties feel the heat

05 Jul 2012

Moody’s bowed to market pressure this week in asking for feedback on a new framework for assessing swap counterparties. But with the rating agency looking merely to refine its methodology rather than embark on the wholesale overhaul that market participants would like, it may get a fairly harsh reaction, writes Joe McDevitt.

How the rating agencies look at counterparties has become a bugbear for bankers because they reckon the pace of downgrades of financial institutions has now outstripped the market’s ability to adapt.

Rating agencies are left with little choice but to consider amending their methodologies or risk killing off markets ...

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