Analysts at a major rating agency say the banks and insurers the firm rates tend to be more stable than the other companies in the firm’s financial institution rating universe.[@@]
The agency, Moody’s Investors Service, New York, has published a report that looks at the correlation between Moody’s bond ratings and issuer failures between 1984 and 2004.
In general, financial institutions of all kinds had higher ratings and lower default rates than other types of companies that Moody’s evaluated, according to the analysts who wrote the report.
The analysts found that 68, or 3.8%, of the 1,794 rated financial institutions defaulted on bonds during the period studied.
Although banks and insurers made up about 81% of the financial institutions that Moody’s rated, they accounted for only 50% of financial institution defaults, the analysts write.
Banks were only 59% as likely to default as the typical rated financial institution, and insurers were only 67% as likely to default, according to Moody’s figures.
Companies in the leasing, thrift, real estate and finance categories were more likely to default on bonds, according to Moody’s figures.