February 2002
Rating Policy
The Bond Rating Process: A Progress Report
Last month, Moody’s published a Special Comment (The Bond Rating Process in a Changing Environment)
which discussed a number of initiatives intended to enhance the quality and timeliness of
our ratings and research, including:
• Providing analysts with information about the market’s opinion of an issuer’s creditworthiness
• Conducting a census of rating triggers in the contractual agreements of rated issuers
• Providing an in-depth analysis of the liquidity risk profiles of commercial paper issuers
• Consideration of measures intended to improve rating timeliness, including shortening rating
reviews, quicker reaction to material events, increased incidence of rating changes without
formal reviews, and streamlining or eliminating rating outlooks.
The special comment stated that “we will not make material changes to our rating process, nor will
we move forward with any proposal without extensive market dialogue”. We are well into that dialogue,
and have met with and heard from many investors and other interested parties globally to discuss our
ideas. This progress report summarizes our preliminary findings. We will continue to publish updated
findings as we meet with other market participants. We will also be publishing a companion White
Paper (Moody’s White Paper: Rating Volatility), which should be released shortly.
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