A Fitch Ratings-sponsored survey released last Wednesday indicates a majority of senior structured finance executives opposed notching, the rating agency said. The survey, published by Washington D.C.-based public opinion firm Greenberg Quinlan Rosner Research, also found that almost three-quarters of those interviewed believe Moody's Investors Service and Standard & Poor's are using their dominant market share to suppress competition in the rating of structured finance bonds.
The notching controversy, which originally started when market participants aired their concerns about the impact of Moody's and S&P's notching policies on CMBS going into CDOs, was first widely broached last June (see ASR, 6/18/01), and has since caused an industry-wide debate about the appropriateness of the agencies' policies. The Fitch survey was completed in time for a much anticipated April 17 Bond Market Association meeting on the subject, which will have all three rating agencies, institutional investors, investment banks, SIV and CDO issuers and other structured finance players in attendance.
According to the Fitch-sponsored survey, the structured finance industry opposes notching by a 52-33 margin, and 72% say there has been little difference on the default and loss performance records across rating agencies.