Moody's Corporation

Moody 's Corporation is the parent company of Moody 's Investors Service and Moody 's Analytics. The company is listed on the New York Stock Exchange. Moody's Analytics is a provider of risk management software. Moody 's Investors Service is a body recognized by the U.S. Financial SEC since 1975, rating agency ( Nationally Recognized Statistical Rating Organization, NRSRO ).

History

The agency was founded in 1909 by John Moody. At that time the agency gave ratings of railroad bonds for payment to investors. 1914 Moody 's Investors Service was founded. Since 1970, Moody's requires such fees are not more of the investors, but from the issuer. In 1975, Moody's added by the SEC in the list of Nationally Recognized Statistical Rating Organization ( NRSRO ).

By March 2009, Warren Buffett's company Berkshire Hathaway owned 48 million shares of Moody's, after which it decreased its share to 28 million. Buffets stake in the company now stands at 13 percent, which he is the largest shareholder and the only one with a share of more than 5%.

In its annual report 2010, Moody 's announced that the U.S. Securities and Exchange Commission had informed the company in March 2010 formally ( Wells notice ) that his application from the year 2007 to remain a NRSRO, will possibly be re-examined.

Market position

Moody's business enterprises and banks according to their published figures and the management also. Additionally, the company rated government bonds. Moody's is the second largest credit rating agency and controlled 40 percent of this market. Three rating agencies, S & P, Moody's and Fitch Ratings dominate 95 percent of the world market. The return on sales by Moody's was above 40 percent in 2011.

In 2009, S & P and Moody's rated according to own data together over a million credits; so were about 1000 per agency analysts concerned. The agencies provide the issuer of the bond rating per 3 to 4 basis points into account, depending on issue size. In addition to the pricing of individual issues, there is another pricing model for large companies and banks, which often take out loans in a " flat rate". The revenues seem small, but it is the mass of the jobs that provides the high profits. The result is further promoted by the low labor costs.

Moody's was instrumental in evaluating the creditworthiness of the securitized mortgage loans in the U.S. and achieved 44 percent of its sales. These mortgages form were a significant cause of the financial crisis of 2008. Rudolf Hickel called the three credit rating agencies as " private license to the money -grubbing."

Ratings

The rating codes used by Moody's, the marginal differ from other rating agencies are:

  • Aaa - Reliable and stable debtor highest quality
  • Aa - Good borrowers slightly higher risk (especially in the long term) than Aaa
  • A - Overall economic situation is observed
  • Baa - medium grade borrowers who currently operate satisfactorily
  • Ba - Very dependent on overall economic situation
  • B - Financial situation is notoriously changeable
  • Caa - Bonds Speculative, low income of the debtor
  • Ca - usually lie here already before payment problems
  • C - in default of payment
  • NR - No rating

Ratings below Baa are considered junk bonds.

In addition, the numerical Annexes 1, 2 and 3 are used for the ratings from Aa through Caa. The Annex 1 means that the company is located in the upper third of the rating range; Annex 2 represents the middle third and Annex 3 for the lower third.

Comparison Table of the major credit rating agencies:

Types of business entity Dominion Bond Rating Service The Wall Street Journal Egan-Jones Ratings Company
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