Rating agency Fitch has reacted angrily to a report on collateralized debt obligations (CDOs) from rival agency Moody’s. The report claims Moody’s ratings of CDOs are consistently lower than those of its rivals. Fitch claims the report accuses it and Standard&Poor’s of negligence and is “remarkably biased”.
The argument has arisen because of a popular and relatively new form of securitization – CDOs of asset-backed securities. To give ratings on these deals, rating agencies not only have to analyze the structure of the CDO deals themselves – they also have to rate the ABS deals in the collateral if these deals were not originally rated by them.
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