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Moody's plans to modify rating system
Moody's Investors Service is modifying the rating methodology it applies to structured finance securities insured by financial guarantors from September 1, a statement said.
The ratings agency will withdraw the ratings on those structured finance securities insured by guarantors that have financial strength ratings below Baa3 [that is non-investment grade] if either of two conditions are met: Moody's is unable to determine an underlying rating [i.e. absent consideration of the guarantee] on the security or the issuer has requested that the guaranty constitute the sole credit consideration.
Moody's rating on a structured finance security insured by a financial guarantor will continue to be at the higher of the guarantor's financial strength rating and providing that an underlying rating can be determined the current underlying rating on the security, regardless of whether the underlying rating is published or not.
If the underlying rating cannot be determined or if the issuer has requested that the guaranty constitute the sole credit consideration, and providing the guarantor's financial strength rating is Baa3 or higher, Moody's rating on a structured finance securitiy shall continue to be equal to the guarantors financial strength rating.
The ratings agency will withdraw the ratings on those structured finance securities insured by guarantors that have financial strength ratings below Baa3 [that is non-investment grade] if either of two conditions are met: Moody's is unable to determine an underlying rating [i.e. absent consideration of the guarantee] on the security or the issuer has requested that the guaranty constitute the sole credit consideration.
Moody's rating on a structured finance security insured by a financial guarantor will continue to be at the higher of the guarantor's financial strength rating and providing that an underlying rating can be determined the current underlying rating on the security, regardless of whether the underlying rating is published or not.
If the underlying rating cannot be determined or if the issuer has requested that the guaranty constitute the sole credit consideration, and providing the guarantor's financial strength rating is Baa3 or higher, Moody's rating on a structured finance securitiy shall continue to be equal to the guarantors financial strength rating.
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