May 30, 2008

Moody's Analytics: The market's implied ratings are better than Moody's

[David] Munves [of Moody's Analytics] says that over one year, the [credit default swap market] implied ratings have been a more accurate predictor of defaults than Moody's ratings. The Moody's unit reports that implied ratings for one year have a 91 percent accuracy ratio compared with an 82 percent ratio for Moody's official ratings. "The Moody's accuracy ratio is consistently lower,'' he says.

~ David Munves, managing director for credit strategy research at Moody's Analytics, "Moody's Implied Ratings Lab Reveals Ambac, MBIA Turning to Junk,", May 30, 2008

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