Justice Eileen Brantsen of the Supreme Court of the State of New York ordered non-parties Standard & Poor’s Rating Services and Moody’s Investors Service, Inc. to produce their internal communications concerning their “shadow ratings” of certain RMBS certificates at issue in an action between monoline insurer MBIA and several Countrywide affiliates. MBIA maintains that it received and relied upon the “shadow ratings” in deciding whether to insure the Countrywide RMBS. MBIA argued that the requested documents were directly relevant to Countrywide’s alleged misrepresentations and the reasonableness of MBIA’s reliance on Countrywide’s representations regarding the quality of the loans underlying the RMBS. Order.
shadow ratings
Rating Agency Developments
On January 11, S&P updated its methodology and assumptions for rating and monitoring U.S. auto loan ABS. S&P Release.
On January 11, Fitch published an updated report on ‘Guidelines for Rating Prerefunded Municipal Bonds‘. Fitch Release. Fitch Report.
On January 12, Fitch revised its Ratings Definitions to remove the term “Shadow Ratings” and to add an “RD”, Restricted Default, definition to National scale short- and long-term Issuer Default Ratings. Fitch Release.