Credit Ratings Becoming More Important To Issuers; Unsolicited Ratings Surge.CHATHAM Chatham, city, Canada Chatham, city (1991 pop. 43,557), S Ont., Canada, E of Detroit, Mich., on the Thames River. It is an industrial center in a rich mixed farming and fruit-raising region. , N.J.--(BUSINESS WIRE)--June 17, 1998--Active management of credit ratings is becoming an increasingly higher priority for senior level corporate executives according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the latest survey from independent ratings advisor Cantwell Cantwell may refer to:
"We are very pleased by the enthusiastic response to the survey and the diversity of the participants", said Joseph Cantwell, president of Cantwell & Company. Survey respondents In the context of marketing research, a representative sample drawn from a larger population of people from whom information is collected and used to develop or confirm marketing strategy. totaled two hundred thirty six names, including banks, utilities and industrial companies from 23 different countries. Among those participating were IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) , Chase Manhattan Manhattan, indigenous people of North America Manhattan (mănhăt`ən), indigenous people of North America of the Algonquian-Wakashan linguistic stock (see Native American languages). , Kimberly-Clark, Daimler-Benz and Natwest. The survey also confirmed the widespread existence of initially unsolicited un·so·lic·it·ed adj. Not looked for or requested; unsought: an unsolicited manuscript; unsolicited opinions. unsolicited Adjective ratings, including a dramatic upsurge at Standard & Poor's which only began doing unsolicited ratings in 1996. Critics of unsolicited ratings argue that these ratings are compromised because analysts do not have full access to company data while supporters insist investors need to have as much information as possible from independent third party observers. "Far from being flawed flaw 1 n. 1. An imperfection, often concealed, that impairs soundness: a flaw in the crystal that caused it to shatter. See Synonyms at blemish. 2. , unsolicited ratings simply incorporate what the rating agencies believe to be more conservative assumptions," said Mr. Cantwell. "Most ratings are requested since the issuer needs the rating or ratings to get the issue sold. Once an issue is in the market, there is nothing to prevent it from attracting an unsolicited rating." Mr. Cantwell went on to say that: "On the equity side, companies actively seek analyst coverage. The controversy surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. unsolicited ratings stems from the enormous concentration of power in the hands of a relatively small number of rating agencies." The survey also revealed a number of other major trends in rating agency affairs, perhaps the most striking of which was the number of respondents who complained that their rating agency analysts were unprepared. "The people who fill out the survey actually participate in the face-to-face meetings with the ratings agencies and more than 20% said that the preparation by the lead analyst from Moody's was either 'poor' or just 'fair'" commented Lisa Porada who managed the survey project. Ms. Porada also noted that "More than 10% percent of the lead analysts from Standard & Poor's were similarly rated while Duff & Phelps came out the best with less than five percent of the company's lead analysts rated either poor or fair." Survey respondents also complained about a high turnover rate among analysts. More than 25% said they did not deal with the same primary Moody's analyst year-to-year, while roughly 15% said they saw significant turnover at Standard & Poor's. Another key finding was the length of the financial projections companies routinely supply to the agencies. Most furnish fur·nish tr.v. fur·nished, fur·nish·ing, fur·nish·es 1. To equip with what is needed, especially to provide furniture for. 2. three to five year projections while others only show one-year numbers. Mr. Cantwell noted that those issuers who were reluctant to supply projections quickly find themselves at an immediate disadvantage. The 1997 International Survey of Credit Ratings is the second annual survey conducted by the firm, which advises existing and prospective issuers on ratings related topics. "We attempted to uncover trends which our clients could use to improve the way they manage their ratings," said Mr. Cantwell. "At the end of the day, an issuer's ratings effect both its financing costs as well as its access to certain markets." Survey questionnaires were sent to almost two thousand entities that had published debt ratings from one or more of the major international credit rating agencies Credit Rating Agencies Firms that compile information on and issue public credit ratings for a large number of companies. . Cantwell & Company believes that this survey is unique in providing important qualitative and quantitative insights into the critical relationship between issuers and the rating agencies. Established in 1991, Cantwell & Company is an independent advisory firm that specializes in debt ratings and credit. Its clients include entities with established debt ratings as well as organizations that are actively seeking or considering obtaining their initial ratings.
CONTACT: Joseph E. Cantwell or Lisa M. Porada
Cantwell & Company, Inc.
Telephone: 1-973-635-9888
Fax: 1-973-635-9899
http://www.askcantwell.com
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