A decade after the triple-A failures of the subprime era, gradeinflation is back on Wall Street. This time, Moody's InvestorsService and S&P Global Ratings Inc. are cutting companies slackon mergers and acquisitions, an analysis of credit-ratings data byBloomberg News found.

Over the past year and a half, both have bumped up their ratingsby two, three or even six levels on a majority of the biggestdeals, the analysis found.

Moody's and S&P don't dispute those findings, which arebased on ratings guidelines posted on their websites. But the firmssay a by-the-numbers approach overlooks one of their most valuableassets: human judgment. Both make clear that their analysts haveleeway to nudge ratings up or down, based on a company's trackrecord and their confidence in management's commitment to reduceindebtedness.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.