Moody's hybrid methodology

Moody's attracted widespread criticism in February for its decision to backtrack on a new proposed methodology for rating hybrid securities. So how should rating agencies rate these securities, and what is wrong with the existing methodologies?


Georg Grodzki - Global head of investment-grade credit, RBC Capital Markets, London

We are not known to be kind to rating agencies, but the outrage over Moody's recent actions sounds hypocritical to us. The agency's mistake was not to invite market comment on its vaguely worded plan to widen the notching between senior and hybrid securities. Moody's was only doing what the market and regulators have been demanding for years: making its processes more transparent and subject to public scrutiny.


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