Standard and Poor’s Rating Services

Rating Agency Developments

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On April 7, DBRS released its Cash Flow Assumptions for Corporate Credit Securitizations Methodology. Report.

On April 7, DBRS released its Rating CLOs and CDOs of Large Corporate Credit Methodology. Report.

On April 7, Fitch released its Updated Global Structured Finance & Covered Bonds Criteria Hierarchy. Report.

On April 6, Fitch updated its U.S. RMBS Cash Flow Analysis Criteria. Report.

On April 6, S&P released its Rating Methodology And Assumptions For Global CMBS. Report.

On April 2, DBRS added a Film Rights Appendix to its DBRS Master U.S. ABS Surveillance Methodology. Report.

On April 2, DBRS released its Rating U.S. Film Rights Securitization Methodology. Report.

On April 1, Moody’s updated its Rating Methodology for Mortgage Insurers. Report.

On March 30, S&P released its Ireland RMBS Methodology And Assumptions, effective April 13, 2015. Report.

 

 

 

 

Rating Agency Developments

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On March 25, S&P released its updated criteria for rating government-related entities.   Report.

On March 25, Fitch released its updated criteria for rating commercial mortgage-backed securities (CMBS) in Asia-Pacific (APAC), including Japan, Australia and Singapore.  Report.

On March 25, DBRS released its criteria for rating Canadian federal, provincial and municipal government STRIPS (Separate Trading of Registered Interest and Principal Securities).  Report.

On March 23, S&P clarified its criteria as to what conditions must be met to raise an issue credit rating from ‘D’ (default), or an issuer credit rating from ‘D’ or ‘SD’ (selective default).  Report.

On March 23, DBRS released its criteria for evaluating and incorporating external and internal support into its ratings of banks and financial institutions.  Report.

On March 20, Fitch released its updated criteria for analyzing large loans in U.S. CMBS transactions.  Report.

Rating Agency Developments

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On March 6, Fitch revised its criteria for rating granular corporate balance-sheet securitizations (SME CLOs).  Approach.

On March 5, Moody’s revised its global approach to data quality evaluation.  Approach.

On March 3, Kroll released CMBS property evaluation guidelines and large loan rating methodology.  Guidelines.  Methodology.

On March 2, S&P revised its rating criteria for rating transactions that include provisions for changing the payment priority or sale of collateral following a nonmonetary event of default.  Criteria.

On February 27, Fitch released a Brazil addendum to RMBS Latin America criteria.  Addendum.

On February 25, Moody’s released its approach to rating US Prime RMBS issued after 2009.  Approach.

S&P Settles RMBS Lawsuits for $1.375 Billion

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On February 2, Standard & Poor’s Ratings Services settled claims brought by the Department of Justice, 19 states and the District of Columbia related to credit ratings it issued and maintained for RMBS and CDOs before the financial crisis. As part of the settlement, it agreed to pay a total of $1.375 billion, with $687.5 million paid to the Department of Justice and $687.5 million to the states and District of Columbia.  Settlement Agreement.

Also on February 2, S&P settled similar claims brought by the California Public Employees’ Retirement System (CalPERS). The terms of that settlement agreement have not been made public.

 

SEC Suspends S&P From Rating Certain CMBS As Part Of $77 Million Settlement

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On January 21, 2015, the SEC suspended Standard & Poor’s Rating Services (S&P) from rating conduit/fusion CMBS for one year as part of a settlement between McGraw-Hill Financial Inc., S&P’s parent company, and the SEC.  The settlement stems from S&P’s disclosures in 2011 that it would utilize a certain methodology to rate six CMBS transactions and provide a preliminary rating for two others, when it actually used a different methodology, forcing S&P to pull a rating on a $1.5 billion bond that same year.  In addition, S&P agreed to retract an allegedly untrue and misleading article that it published in 2012 and settled another claim that it failed to maintain and enforce internal controls regarding changes to its monitoring standards for certain RMBS.  S&P further agreed to parallel settlements with New York Attorney General Eric Schneiderman and Massachusetts Attorney General Maura Healey.  The rating agency has also agreed to pay more than $77 million to settle these claims with the federal and state regulators ($58 million to the SEC and another $19 million to New York and Massachusetts).  SEC Settlement Order 1.  SEC Settlement Order 2.  SEC Settlement Order 3.

Class Action Brought Against S&P and Moody’s in Illinois State Court

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On July 3, First National Bank and Trust Company of Rochelle, Illinois (FNBR) filed a putative class action lawsuit against McGraw-Hill Companies Inc., Standard and Poor’s Rating Services (S&P) and Moody’s Corp. in Illinois state court.  FNBR alleges that the rating agencies knowingly or recklessly issued inflated RMBS ratings and failed to amend those ratings when the mortgages underlying the securities began to fail.  Plaintiff seeks to represent a class of all Illinois banks that purchased highly rated RMBS certificates between December 2007 and February 2008.  Plaintiff’s claims are for fraud, negligent misrepresentation and violations of the Illinois Consumer Fraud and Deception Business Practices Act and the Illinois Uniform Deceptive Trade Practices Act.  Complaint.