Structured investment vehicle investors, as well as Standard & Poor's and Moody's Investors Service, have been increasingly perplexed over the timing of Fitch Rating's recent decision to place the long- and short-term ratings of Gordian Knot Ltd.'s SIV, Sigma Finance Corp., on Rating Watch Negative.

In what some market participants have characterized as a "playground spat" between the rating agency and the U.K.-based investment manager, Fitch announced its Rating Watch action on Gordian Knot's SIV, which has a balance sheet of $32.5 billion, on Feb. 14, threatening to lower the ratings to A' long-term and F1' short-term, from the SIV's current status of AAA/F1+'. Citing the need for "greater transparency to investors" and the spectre of "operational risk issues" associated with the SIV, Fitch expressed serious concerns over several proposed structural changes to Sigma which Gordian plans to implement within the next year.

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