Friday, September 24, 2010

S&P Launches “Understanding Ratings” Web Site

NEW YORK (Standard & Poor's) Sept. 21, 2010--Standard & Poor's Ratings Services, one of the world's leading credit rating agencies, today launched "Understanding Ratings," a new information and education resource for investors that can be found at UnderstandingRatings. The Web site brings together, free of charge, articles, videos, podcasts, and educational guides to provide insights into what credit ratings are (and what they are not), the processes by which Standard & Poor's produces ratings, and how those ratings have performed over time.

"Discussions with investors around the world over the past two years have consistently highlighted their desire for more transparency about how ratings are determined," said Bruce Schachne, Vice President of Market Development at Standard & Poor's. "Credit ratings continue to serve as benchmarks for creditworthiness, and investors continue to utilize credit ratings and research as part of their investment decision making processes. Investors seek a better understanding of how Standard & Poor's arrives at its ratings--what the methodologies are, what role the analysts play in the process, and how ratings perform. UnderstandingRatings was designed to meet the information and ratings transparency needs of the investment community, particularly pension funds and plan sponsors. Moreover, our ratings and research are aimed at helping investors better identify and understand credit risks."

UnderstandingRatings focuses on three core elements of credit ratings:
  • Criteria used to determine ratings and analytics;
  • Ratings performance; and
  • People--the 1,300 Standard & Poor's analysts around the globe who rate debt securities.
To explain these areas, Standard & Poor's rating analysts, credit officers, ratings executives and other staff address topics such as:
  • The ratings process and the processes we have put in place to support the independence of ratings;
  • The specific methodologies used to analyze various asset classes such as corporate bonds, municipal bonds,structured finance, and sovereign debt;
  • The ways in which ratings performance can be measured and compared;
  • An evaluation of the performance of ratings in various asset classes over the past several years;
  • The role of the analyst and rating committee in arriving at ratings, and
  • Standard & Poor's credit outlook for various industries, sectors, countries, and regions.
In addition, the site allows users to download Standard & Poor's "Guide to Credit Rating Essentials" and "Guide to Ratings Performance," which explain key concepts of credit ratings in simple, accessible language.

Ratings performance has been a particular area of heightened investor focus over the past two years.

"In the wake of the financial crisis, there has been much discussion about the performance of credit ratings," said Deven Sharma, President of Standard & Poor's. "Earlier this year, we conducted a comprehensive review of credit ratings, and the review demonstrated that ratings, for nearly all asset classes, performed broadly as expected in the face of the extreme stresses of the past two year, with the exception of ratings on certain U.S. residential mortgage-related securities. Through the 'Guide to Ratings Performance' and other materials on UnderstandingRatings, we address the questions that investors have posed regarding recent ratings performance, deliver facts and data on how ratings have, in fact, performed, and also provide details on the changes that Standard & Poor's has made based on lessons learned from the recent financial crisis."

UnderstandingRatings is the most recent initiative in Standard & Poor's ongoing investor outreach program, which also includes conferences, seminars, live video Web casts, teleconferences, mobile applications (including our successful CreditMatters iPhone app available free of charge through iTunes). Standard & Poor's also conducts countless meetings and calls between Standard & Poor's analysts and investors each year.

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