Does rating shopping exist in spanish securitization issues?/¿Existe el rating shopping en las emisiones de titulización españolas?

Debt issue credit ratings can lead to conflicts of interest as the issuer itself is entrusted with contracting and compensating the rating agency. Into the bargain, the credit rating agency may be involved in designing the issues that the same agency subsequently rates. Credit rating agencies thus c...

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Bibliographic Details
Published inCuadernos de gestión Vol. 15; no. 1; p. 119
Main Authors Peña-Cerezo, Miguel Á, Rodríguez-Castellanos, Arturo, Ibáñez-Hernández, Francisco J
Format Journal Article
LanguageEnglish
Published Bilbao Universidad del Pais Vasco Instituto de Economía Aplicada a la Empresa de la UPV/EHU 01.01.2015
Subjects
Awards & honors
Bond ratings
Collateral
Collateralized debt obligations
Conflicts of interest
Credit ratings
Hypotheses
Investment advisors
Market shares
Rating services
Ratings & rankings
Securities offerings
Securitization
Shopping
Studies
Spain
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Summary:Debt issue credit ratings can lead to conflicts of interest as the issuer itself is entrusted with contracting and compensating the rating agency. Into the bargain, the credit rating agency may be involved in designing the issues that the same agency subsequently rates. Credit rating agencies thus could have incentives to rate issues advantageously. Given the economic importance of this issue, in this paper we have proposed to analyze this phenomenon, known as rating shopping in academic literature, for Spanish market securitization issues for the period of time comprehensive from January 1993 to December 2011. In sum 3,665 published ratings are been analysed, for an issued nominal amount of 791,090 million Euros. The results show an association between the credit rating agency contracted and the mean rating awarded. Significant differences are observed in the ratings associated to the contracting manager (or special purpose vehicle -SPV- manager firm), to the number of ratings or to the type of collateral. Furthermore, a pattern compatible with rating shopping was observed for some types of collateral: abnormally high market shares associated with certain agencies awarding unusually generous ratings. However, this phenomenon is not seen to be widespread on the rating market associated to Spanish securitization issues.
ISSN:1131-6837
1988-2157