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Multi-National Ratings Agency To Launch As Alternative To Big Three

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Credit ratings organisations from five countries are launching a new global agency, touting it as an alternative to the Big Three agencies which they say no longer meet the needs of the new globalised world. In a statement on Tuesday, ARC Ratings said the agency would launch in London as a joint venture between CPR of Portugal, CARE Rating of India, GCR of South Africa, MARC of Malaysia, and Brazil's SR Rating. Link

Will it make any difference?

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Will it make any difference?

Unless they remove the conflict of interest (in that the people paying them are the people getting the rating) then I doubt it will make a lot of difference.

A lot of the market (fast money especially) will take little notice of ratings anyway, considering the credit spread a far better indicator or credit worthiness. Not that they don't wield a lot of power though, as most real money/long only/index stuff will have some kind of rating related limits on what they can invest in (ie investment grade funds can't invest in sub-investment grade bonds, based upon rating). I guess the usefulness of a new agency would also depend upon whether mandates were changed to take notice of a new agency's ratings, I'd've thought most will specify rating is from S&P, Moody's or Fitch (only a few years back a lot of places didn't even count Fitch).

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You could always ask people here! We are full of "wisdom", we are! :blink:

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