The Wall Street Journal's top credit reporters Liz Rappaport and Serena Ng have a small article on C1 of today's paper that probably should have been A1 above the fold. The article, "Credit Ratings Now Optional, Firms Find," on bond issuers issuing debt without ratings from the big agencies says more about how to deal with the failures of Moody's, S&P and Fitch during the recent credit boom than any piece on public policy could.
For the last week or so, I've worked hard to stay away from articles that are too heavy in public policy because this isn't a political blog and it's too hard to evaluate the articles as journalism without bias, i.e. "the good articles are the ones I agree with."
However, by checking out what businesses are doing in practice, and how they can sell into the credit markets without ratings shows how badly the ratings agencies damaged their brands during the bust and why further regulation isn't necessary, although the article notes that proposals are still moving through the regulatory structure.
Now that AAA ratings have been exposed as about as meaningful as "Seen on TV" stickers at Odd Lot trading, we can all just move on.
"Our reputation is good....I don't think a rating would have mattered that much," said Bob Kunze-Concewitz, chief executive of Italy's Gruppo Campari, which in October sold €350 million ($515 million) in seven-year bonds with a 5.375% interest rate.
Amen.
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