Credit Rating Agencies

Credit rating agencies (CRAs) evaluate the creditworthiness of debt issuers on financial markets. They are private companies and their ratings are opinions about the prospect of repayment of debt. CRAs have gained an authority in bond markets that surpasses their original design, but they were blamed for their excessively optimistic ratings and complicity in creating the 2008 financial crisis. This book explores the complex world of the credit rating industry, its role in the financial crisis, and its regulation.

Format: Paperback / softback
Length: 152 pages
Publication date: 28 April 2022
Publisher: Agenda Publishing

Credit rating agencies (CRAs) play a crucial role in assessing the creditworthiness of debt issuers on financial markets. These private companies provide ratings that serve as judgments about the likelihood of an issuer repaying their debt in a timely and full manner. It's important to note that a rating is not an investment recommendation but rather an opinion about the creditworthiness of a financial product or an issuing bank, government, supra- or sub-national institution.

Over the past few years, CRAs have gained significant authority in bond markets, surpassing their original design. However, their prominence was brought to the forefront during the financial crisis of 2008, when their highly rated financial products were revealed to be toxic assets. CRAs faced criticism for their excessively optimistic ratings and their role in creating them.

This concise book aims to introduce and explore the intricate world of the credit rating industry. It delves into how CRAs operate, their evolution, their role in the financial crisis, and the regulatory framework governing them. Author Giulia Mennillo highlights the social and political relevance of CRAs, recognizing their impact beyond the realm of finance into areas such as transport, infrastructure, education, and health. Their influence serves as a symbol of the growing financialization of our world.

In conclusion, CRAs play a vital role in shaping the financial landscape by providing ratings that help investors and decision-makers make informed choices. However, their authority and impact must be carefully monitored and regulated to ensure the stability and integrity of financial markets.

Dimension: 234 x 156 (mm)
ISBN-13: 9781788211932