Newsletter September 09: Rating agencies under fire over hybrid losses

Credit rating agencies are, yet again, under fire from investors, over the losses suffered in the hybrid market. The hybrids were mis-rated, according to Roger Doig, a credit analyst at asset management firm, Schroders, in London. “The cardinal mistake that the rating agencies made was to notch these [hybrid instruments] automatically two notches below the bank’s senior debt rating, even though there are significant differences in the risks to the principal for these two types of debt,” he says.