Bangkok--11 Jun--Standard & Poor’s
Standard & Poor’s has published a review of the performance of its credit ratings during periods of significant economic stress. The review shows that ratings for nearly all asset classes issued in the U.S., Europe, Japan and Australia generally performed as expected, with the exception of ratings on U.S. mortgage-related securities issued from 2005 — 2007. The report, “A Global Cross-Asset Report Card Of Ratings Performance In Times Of Stress,” is available on Standard & Poor’s homepage and on S&P’s Global Credit Portal.
The report examined the downgrade and default rates of eight major categories of securities rated by S&P during the three most recent periods of economic stress (1991, 2001 and 2008/09). The categories are Corporate Bonds, Financial Institution Bonds, Residential Mortgage-Backed Ratings, Structured Finance-Backed Collateralized Debt Obligations, Commercial Mortgage-Backed Securities, Asset-Backed Securities, U.S. Public Finance Bonds, Sovereign and International Public Finance Bonds.
Other than U.S. mortgage-related securities, S&P’s ratings performance was similar during the periods of economic stress examined. While downgrades typically increase in all sectors in times of stress, the pace of downgrades was not exceptional when compared to the other periods examined in this report, except for the previously-mentioned U.S. mortgage-related securities.
“It is gratifying to see that our ratings on most asset classes withstood the recent financial crisis with results in line with our expectations,” said Mark Adelson, Standard & Poor’s Chief Credit Officer. “That said, we are disappointed by the performance for ratings of U.S. residential mortgage-backed securities and collateralized debt obligations backed by structured finance collateral. We’ve made many changes and criteria enhancements based on lessons learned from the recent financial crisis. Overall, the updated criteria should make it more difficult for securities in the sectors that have displayed poor credit performance to receive high ratings.”
About Standard & Poor’s
Standard & Poor's Financial Services, LLC, a subsidiary of The McGraw-Hill Companies, Inc.(NYSE:MHP), is the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research and data. With offices in 23 countries and markets, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for 150 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit www.standardandpoors.com.