(Reuters) - The methods used to rate the deals are complicated and vary
between rating agencies. Unlike corporate bond ratings, which
are usually steady unless a company's fundamental condition
changes, CDO ratings are also vulnerable to changes in ratings
methods, which are in constant flux, CreditSights said in a
report.
"The ratings are not quite as equivalent as the market has
believed in the past," Brian Yelvington, senior macro
strategist at CreditSights and one of the authors of the
report, said in a telephone interview. "There's a reason you're
getting that excess spread in CDO tranches, and the problem is
that you don't know how the ratings are going to change."
Read more at Reuters.com Bonds News
between rating agencies. Unlike corporate bond ratings, which
are usually steady unless a company's fundamental condition
changes, CDO ratings are also vulnerable to changes in ratings
methods, which are in constant flux, CreditSights said in a
report.
"The ratings are not quite as equivalent as the market has
believed in the past," Brian Yelvington, senior macro
strategist at CreditSights and one of the authors of the
report, said in a telephone interview. "There's a reason you're
getting that excess spread in CDO tranches, and the problem is
that you don't know how the ratings are going to change."
Read more at Reuters.com Bonds News
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