Morningstar announced today that it will launch its residential mortgage-backed securities (RMBS) ratings and surveillance analytics service at the upcoming ABS East conference in Miami.
The new service, RMBS Ratings and Analytics, will provide institutional investors with analytics, Morningstar's monthly DealView Credit Analysis, and timely letter ratings on thousands of secondary market RMBS transactions.
The service will be focused toward the investor community, and will improve market transparency, ratings stability, and especially the timeliness of surveillance reviews and ratings updates.
"Before the recent credit crisis, the traditional rating agencies considered a transaction to be performing normally unless it broke an 'exception' threshold, in which case it would then be subject to a full surveillance review," Robert Dobilas, president of Morningstar's structured credit ratings business said. "In today's dynamic post-crisis mortgage world, the passive surveillance routine of the past is no longer acceptable. Investors are demanding a surveillance process that is proactive, timely, and transparent. RMBS investors need comprehensive, up-to-date information about the potential credit risk of their RMBS investments."
Each Morningstar RMBS rating will undergo a rating review every month, which will allow the analysis to quickly reflect market changes. In addition to Morningstar's monthly DealView analysis and letter ratings, the new service will feature an interactive statistical model with investor-driven assumption capabilities, updated performance data, default probabilities, and loss severity projections.
"We built our reputation in structured finance by providing investors with the gold standard of analysis for CMBS securities, a market that was traditionally underserved by the other rating agencies," said Dobilas. "Our CMBS analytics changed the way investors conducted surveillance of their portfolios and performed reviews of secondary market investment opportunities. With RMBS Ratings and Analytics, we intend to do the same for the RMBS market."