Survey criticizes credit ratings. (Business Briefs).A recent survey by the Association for Financial Professionals (AFP (1) (AppleTalk Filing Protocol) The file sharing protocol used in an AppleTalk network. In order for non-Apple networks to access data in an AppleShare server, their protocols must translate into the AFP language. See file sharing protocol. ) finds many financial professionals ready to vote thumbs down on credit ratings, which they view as often inaccurate and slow to reflect changes in company finances. As a result, AFP has urged the Securities and Exchange Commission to refocus Verb 1. refocus - focus once again; The physicist refocused the light beam" focus - cause to converge on or toward a central point; "Focus the light on this image" 2. its oversight of rating agencies. 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 survey, 29 percent of practitioners who work for companies with rated debt believe that their company's ratings are inaccurate--and only 40 percent of these managers believe that changes in their company's ratings are timely. More than one-quarter of 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. whose companies have experienced a downgrade Downgrade A negative change in the rating of a security. Notes: For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA. , report that it took more than six months for their rating to be downgraded to reflect an adverse financial change. Ratings upgrades taken even longer, with 57 percent of respondents from companies that experienced an upgrade reporting that the change took place more than six months after a positive change in their company's financial position. In other findings: * Treasury and finance corporate practitioners tend to believe that their company's ratings reflect its industry, rather than the company's financial performance. * While rating agencies are supposed to support investors' information needs, relatively few treasury and finance professionals believe the ratings favor investor interests. * Most treasury and finance professionals believe it is appropriate for the SEC to identify "acceptable" rating agencies. Ninety percent believe the SEC should take additional action to improve its oversight of the agencies and foster greater competition. Currently, three rating agencies-Moody's, Standard & Poor's and Fitch-are the only nationally recognized statistical rating organizations A Nationally Recognized Statistical Rating Organization (or "NRSRO") is a credit rating agency which issues credit ratings that the U.S. Securities and Exchange Commission (SEC) permits other financial firms to use for certain regulatory purposes. . The survey was conducted last fall via email to senior-level AFP practitioner members and prospects, as well as AFP associate members working for banks. |
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