Standard and Poor's late last week said it will begin assigning so-called "swap risk ratings" upon request to all rated credit default swaps - primarily those in the global synthetic CDO sector. The move highlights both efforts toward transparency within the credit default swap market, along with a shift to include the structural nuances of unfunded credit default swap transactions within the definition of ratings.

Driven in part by Basel II, the swap risk ratings will be issued publicly and all existing credit default swaps with either confidential credit estimates or assessments will become public upon the counterparty's request. The rating agency has already received "several" requests to provide public swap risk ratings for credit default swaps, it said. Many think Basel II rules could require the swaps to carry a public rating in order to obtain regulatory capital relief.

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