Project Management

Multiple Ratings And Credit Spreads

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Executive Summary

This paper explores the role played by multiple Credit Rating Agencies (CRAs) in the market for corporate bonds. Moody's, S&P and Fitch operate in a competitive setting with market demand for both credit information and the certification value of a high rating. The authors empirically document the outcome of this competitive interaction over the period 2002 to 2007. Virtually all bonds in the sample are rated by both Moody's and Standard and Poors (S&P), and between 40% and 60% of the bonds are also rated by Fitch.

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