Aiming to fill the void left behind by Duff & Phelps Credit Rating Co., Thomson Financial BankWatch recently announced that it will begin rating asset-backed securities issues.
"We are a full-service rating agency," said Norman Last, who was recently hired as senior vice president and managing director to head up the endeavor. "Thomson BankWatch does have a NRSRO (nationally recognized statistical rating organization) designation, so our ratings are fully accepted. We're planning on going very heavily into the ABS market, and we are hiring experienced analysts and trying to build a presence there."
Due to his experience at Standard & Poor's Ratings Service and more recently Duff & Phelps, Last said that the ratings criteria used by BankWatch will be similar to the one currently used by the other ratings agencies.
"I spent seven years at Standard & Poor's where I helped to develop criteria there, five years at Duff & Phelps managing the group and developing that criteria, so that background and that information will be utilized, as well as hiring an experienced staff of people," Last said.
He added that before any asset-backed transaction is rated the rating agency has to get comfortable with the issuer, the collateral, the structure, as well as the legal structure of the transaction. BankWatch plans to perform all of this analysis.
Last also expects that the ratings of BankWatch will be comparable to those of Moody's Investors Service, Fitch, and Standard and Poor's.
"Thomson BankWatch's ratings are accepted by the National Association of Insurance Commissioners (NAIC), so our ratings will have similar impact," he said. "We do have the NRSRO designation, but this is a start-up, so it will take time for us to get there. Our goal isn't initially to conquer the world; it is to focus on ABS transactions and help the marketplace get transactions done, where currently they might be having difficulty getting a rating."
But the main focus of the company is to become a competitor to the other ratings agencies. Last said that Thomson has noticed a void left in the asset-backed marketplace, particularly in the private area where Duff & Phelps was so strong.
"There is a definite void there so we will be focusing on the private asset-backed market," he said. "Thomson BankWatch is the world's largest bank-rating agency so we will hopefully be using those relationships to help expand and build BankWatch's public asset-backed business as well."
The company plans to rate both international and domestic asset-backed deals.
"This will be a global effort," Last said.