Downgrade doomsday: utilities fear swap dealer shortage

Tough ratings criteria for utility securitisations mean they could be left short of swap counterparties. Utilities are worried they could face downgrades as a result – and potentially be stripped of their licences. Matt Cameron reports

Utility financing costs

UK utilities could see their financing costs increase and, in a worst-case scenario, lose their government-approved licences, if a Moody’s Investors Service review of ratings for 17 global dealers turns out to be be the precursor to a series of downgrades. That might seem odd, but the crisis years have not been kind to the financial system’s hidden links and interdependencies – this is just the latest to be exposed. Moody’s is expected to announce its decision in mid-May.

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Credit risk & modelling – Special report 2021

This Risk special report provides an insight on the challenges facing banks in measuring and mitigating credit risk in the current environment, and the strategies they are deploying to adapt to a more stringent regulatory approach.

The wild world of credit models

The Covid-19 pandemic has induced a kind of schizophrenia in loan-loss models. When the pandemic hit, banks overprovisioned for credit losses on the assumption that the economy would head south. But when government stimulus packages put wads of cash in…

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