Those AAA rated subprime loans certainly didn’t help, and now comes fresh evidence that investors are increasingly ignoring rating actions at the ‘big three’ in favor of their own analysis.
The latest response to the Moody’s Investors Service downgrade of the biggest Nordic banks was rising bond and share prices, according to Bloomberg, the exact opposite of what should happen when a seismic event of this magnitude occurs.
“The reaction is the latest sign that investors are paying less attention to the views of rating companies and relying more on their own analysis to determine whether to buy or sell,” the news service says.
“We can see for ourselves just how strong the Swedish banks are so we don’t place much weight on what rating agencies tell us,” Nicklas Granath, a partner at the Stockholm-based asset manager Norron who helps manage about $200 million, said in an interview with Bloomberg. “More and more the market is likely to take the same approach.”
Bloomberg says “Investors are showing greater willingness to ignore Moody’s, Standard & Poor’s and Fitch Ratings” as European pokicymakers try to reduce the raters’ influence. “Denmark, which holds the European Union presidency, said this month it won backing in the 27-member bloc to curtail the influence of the raters. Danish banks have started firing Moody’s, while Swedbank AB, one of Sweden’s four biggest lenders, has said the views published by rating companies are ‘backward looking.’”