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European Securitization Awards 2022: Rating Agency of the Year — Moody’s Investors Service

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An increased focus on transparency has led the agency to publish the tools and models that underlie its analysis

The last 12 months has dashed the hopes of weary investors eager for a return to normality. Pandemic-related concerns eased and allowed issuance to recover. But a host of new challenges emerged - rampant inflation, accelerated monetary tightening and an uncertain economic outlook.

In a second successive year of turmoil, it was Moody’s that stood out once again for its ability to inform and guide the market through unprecedented times, which is why, the firm is our Securitization Rating Agency of the Year. An accolade supported by its other award – CLO Rating Agency of the Year.

“We’re extremely proud of our team’s ability to maintain exceptional standards throughout the year,” says Neal Shah, managing director of Moody’s EMEA structured finance group. “It really shows not just the hard work from an analytical perspective, but the depth of experience and expertise.”

Shah highlights the level of interaction and cooperation between teams that is at the heart of the agency’s success. “There’s this camaraderie between teams that positions us second to none in the structured finance space,” he says. “Without it we couldn’t have served the market to the high standard that we did.”

What stands us apart from the street is that we don’t talk about an asset class in isolation. It’s that thematic in-depth knowledge base that serves us so well and allows us to provide not just credit ratings but market-leading thought-provoking research on a broad range of issues
Neal Shah, managing director of Moody’s EMEA structured finance group
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Such interplay means that Moody’s clients benefit from cutting-edge insight across every sector and segment, which translates into far broader and comprehensive understanding. This was crucial in a year when traditional structured finance concerns competed with idiosyncratic issues for investors’ attention. From the rollback of government support schemes to the end to Libor, Moody’s was poised to offer commentary and cutting-edge research.

“What stands us apart from the street is that we don’t talk about an asset class in isolation,” says Shah. Moody’s talks clients through auto-transformation, not just auto-ABS. Buyers of CMBS receive intelligence on the entire real estate market and its different components. Covered bond investors can avail themselves of analysis on the underlying banking sector, not just the bonds. “It’s that thematic in-depth knowledge base that serves us so well and allows us to provide not just credit ratings but market-leading thought-provoking research on a broad range of issues,” he says.

Securitization issuance showed strong growth across all asset classes. But it was the CLO market that shone for its surge in supply, where the pace of refinancing reached a level not seen since the global financial crisis.

“For CLOs, it was really the sheer volumes that distinguished the asset class,” says Christophe de Noaillat, managing director in Moody's structured finance group. Some €40bn of new issuance combined with €60bn of refi-reset meant around €100bn of debt to be rated or re-rated. “It really was a phenomenal year given it was a transition period coming from the covid-19 slowdown,” he says.

In maintaining exemplary coverage amid a booming recovery, de Noaillat underscores two aspects of Moody’s overall approach that are particularly apposite when it comes to the CLO market. “One is timely execution, which is especially relevant for refinance and reset deals,” he says. “The other is analytical vigilance.”

For CLOs, it was really the sheer volume that distinguished the asset class. It really was a phenomenal year given it was a transition period coming from the Covid-19 slowdown
Christophe de Noaillat, managing director in Moody's structured finance group
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In such a large market where things can change quickly, Moody’s’ ability to combine pace and precision is paramount. Investors need an agency that remains on top of the myriad structural tweaks that occur in deals and provides in-depth assessment and expert commentary. “This is key for investors when the market moves at such a speed and I think that’s exactly what we’ve done,” says de Noaillat.

The numbers speak to Moody’s outreach efforts across its client base. Almost 1,000 in-depth meetings and 200 sector specific reports on top of the standard credit opinion, new issue and pre-sale reports. Yet the agency is constantly searching for new ways to engage. An increased focus on transparency has led the agency to publish the tools and models that underlie its analysis - most recently making available the cash flow engine it uses for ABS and RMBS transactions. Last year also saw Moody’s expand its digital offering across video, podcasts and infographics - including a structured finance-specific series on key themes and trends.

“We are orienting ourselves towards not only what the market wants to hear from us, but the platforms and formats through which it wants to receive information,” says Shah.

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