By Andreas Kruck (auth.)
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Additional info for Private Ratings, Public Regulations: Credit Rating Agencies and Global Financial Governance
In payment default; payments on an obligation are not made on the date due; used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized. Note: * The definitions are from S&P’s (2008). Moody’s definitions are similar. S&P’s ratings from ‘AA’ to ‘CCC’ may be modified by the addition of a plus (+) or minus (−) sign to show relative standing within the major rating categories. Moody’s uses the numbers 1, 2, 3 for that purpose. 1. somewhat from agency to agency (Gras 2003: 8; S&P’s 2007a, c; Sinclair 2005: 46–7).
25 basis points on issues up to 500 million US dollars, with a minimum fee of 25,000 US dollars and a maximum of 125,000 US dollars (S&P’s) or 130,000 US dollars (Moody’s); both Moody’s and S&P’s charged an additional two basis points on amounts above 500 million US dollars. S&P’s capped the amount at 200,000 US dollars; it also had a onetime fee of 25,000 US dollars for first-time issuers. Both Moody’s and S&P’s offered negotiated rates for frequent issuers. The fees charged by Fitch were slightly lower (White 2001: 14).
Quite obviously, these adjustments affect the market value of rated financial products and the opportunity for rated issuers to get access to new capital. Roles and functions of credit rating agencies in the global political economy The basic function credit rating agencies perform in the global political economy is to lower inefficient transaction costs and to reduce information asymmetries between borrowers and lenders in financial markets (Nölke and Perry 2007: 129). Credit rating agencies act as (inter-)mediators between capital supply and demand.
Private Ratings, Public Regulations: Credit Rating Agencies and Global Financial Governance by Andreas Kruck (auth.)