In my morning news sweep, I came across an interesting little tidbit about a Chinese bond rating firm. The company is Dagong Global Credit Rating, and according to its website, it is the founder of the native Chinese bond rating industry. With 500 employees, it would be tiny compared to Moody's (NYSE: MCO), McGraw-Hill's (NYSE: MHP) Standard and Poors, and Fitch, but then it does not have nearly the same breadth of operations at this point.
What brought this to my attention was a piece on Al-Jazeera's English language website regarding Dagong's view of sovereign credit. In Dagong's world, the AAA countries of the world are Norway, Australia, Denmark, Luxembourg, Switzerland, Singapore, and New Zealand. China and Germany score as "AA+", with the U.S. and Saudi Arabia just behind at "AA". Interestingly, Spain, South Africa, Estonia, Russia, Poland, Italy, Portugal, and Brazil all pull the same "A-" rating. Mexico and India get a "BBB", while Greece, Turkey, and Iceland share a "BB", Vietnam gets a "BB-" and Ecuador is the bottom at CCC.
A lot of things stand out here.
First, Dagong gives just 6 local currency AAA ratings; Moodys gives 14 and S&P and Fitch give 13. Second, Dagong is more positive on China, Saudi Arabia, Russia, Brazil, and India, but more negative on Canada, the US, UK, and France.Now, I happen to think that Mexico, Turkey, Poland, and Vietnam are under-rated, but Dagong is consistent with the other agencies on those, so I do not have a particular bone to pick with them.
I really cannot speak to how independent Dagong may be (is it a coincidence that Dagong likes Saudi Arabia and China very much wants to be on solid terms with the Kingdom?), as I did not even know about them five hours ago. Still, I am impressed at first blush with the logic and assumptions that underlie the work (at least as described in the report). What's more, I really think the bond rating world needs fresh blood and new opinions, so any credible analysis that shakes up the status quo is a welcome arrival for this writer.
I doubt individual investors will be able to harness this research for their own purposes, but I am glad to hear that new voices are speaking out. We have seen the limitations of Moody's, S&P, and Fitch amply demonstrated over the past few years, so maybe a new way of approaching the problem is what we all need.
Showing posts with label Standard and Poors. Show all posts
Showing posts with label Standard and Poors. Show all posts
Tuesday, July 13, 2010
Wednesday, June 23, 2010
Muni-phobia
Wish I would have had more space to deal a bit with the bond insurers who also stand to be on the hook if/when these munis start melting down... Who knows, maybe that's another article all on its own!
The ticking clock is a great device for creating dramatic tension on screen. You might get up to go get a snack when the lead actors are emoting, but nobody leaves when there is three seconds left on the device that is going to explode. Maybe that is why there is so much fuss in the financial media about the impending detonation of the municipal bond market.
Safe and Sleepy... UsuallyIn normal days, municipal bonds are arguably one of the sleepiest and most boring segments of the financial marketplace. Munis are bonds issued by communities or enterprises to pay for things like roads, hospitals and schools. So dull are they that there is typically no active quotation system for them - they trade seldom enough that you have to call your broker, who will then call around to get bid/ask quotes on the bond. (For a quick refresher, check out The Basics Of Municipal Bonds.)
Now, though, that may be changing.
For the complete column:
http://stocks.investopedia.
The ticking clock is a great device for creating dramatic tension on screen. You might get up to go get a snack when the lead actors are emoting, but nobody leaves when there is three seconds left on the device that is going to explode. Maybe that is why there is so much fuss in the financial media about the impending detonation of the municipal bond market.
Safe and Sleepy... UsuallyIn normal days, municipal bonds are arguably one of the sleepiest and most boring segments of the financial marketplace. Munis are bonds issued by communities or enterprises to pay for things like roads, hospitals and schools. So dull are they that there is typically no active quotation system for them - they trade seldom enough that you have to call your broker, who will then call around to get bid/ask quotes on the bond. (For a quick refresher, check out The Basics Of Municipal Bonds.)
Now, though, that may be changing.
For the complete column:
http://stocks.investopedia.
Tuesday, June 8, 2010
Taking (Apart) Buffett At His Words
If I keep this up I'm not going to be allowed back home (Omaha).
By the way, there was a small misprint in the first sentence of the last paragraph. We'll be getting that fixed soon.
On Wednesday, June 2, 2010, Berkshire Hathaway's (NYSE:BRK.A) CEO and chairman Warren Buffett, testified live in front of Congress's Financial Crisis Inquiry Commission. As much as I admire and respect him, I stubbed my eye more than once while reading the reports of his testimony. Here are some of the statements that really stood out. (Find out what makes the Oracle of Omaha so great in Warren Buffett: The Road To Riches.)
Why No Written Record?Warren Buffett elected not to provide any written testimony. Perhaps that is no big deal (he might have just been speaking extemporaneously), but it is notable for at least one reason - he was the only person to speak in front of the Commission that day to not offer written testimony.
For the full text, please go to:
http://financialedge.investopedia.com/financial-edge/0610/Taking-Apart-Buffett-At-His-Words.aspx
By the way, there was a small misprint in the first sentence of the last paragraph. We'll be getting that fixed soon.
On Wednesday, June 2, 2010, Berkshire Hathaway's (NYSE:BRK.A) CEO and chairman Warren Buffett, testified live in front of Congress's Financial Crisis Inquiry Commission. As much as I admire and respect him, I stubbed my eye more than once while reading the reports of his testimony. Here are some of the statements that really stood out. (Find out what makes the Oracle of Omaha so great in Warren Buffett: The Road To Riches.)
Why No Written Record?Warren Buffett elected not to provide any written testimony. Perhaps that is no big deal (he might have just been speaking extemporaneously), but it is notable for at least one reason - he was the only person to speak in front of the Commission that day to not offer written testimony.
For the full text, please go to:
http://financialedge.investopedia.com/financial-edge/0610/Taking-Apart-Buffett-At-His-Words.aspx
Thursday, June 3, 2010
Buffett's Take On The Credit Crisis
I think I have reached the point now where nothing tied to the housing bubble, the credit crisis and the recession surprise me anymore. The capper was the testimony of Berkshire Hathaway's (NYSE:BRK.A) CEO Warren Buffett in front of Congress on Wednesday.
The Testimony
In his testimony, Buffett said that he did not believe that the CEOs of the credit ratings agencies deserve to be fired, and that the companies should not be criticized too harshly because they "made a mistake that virtually everybody in the country made."
Please read the full column at:
http://stocks.investopedia.
The Testimony
In his testimony, Buffett said that he did not believe that the CEOs of the credit ratings agencies deserve to be fired, and that the companies should not be criticized too harshly because they "made a mistake that virtually everybody in the country made."
Please read the full column at:
http://stocks.investopedia.
Subscribe to:
Posts (Atom)