There's a Fine Line Between Protecting Investor Interests and Working Candidly with Issuers
In the final analysis, the product a rating agency "sells" to issuers is its credibility with a broad client-base of investors who rely on its credit opinions. Maintaining investor confidence in the objectivity of ratings is therefore critical.
Rating agency decisions which directly affect an issuer's reputation or borrowing costs may sometimes be received less than enthusiastically by their constituencies. But no rating agency can truly add value in the marketplace unless it is prepared to put its integrity on the line in forthright risk opinions -- independent of all interested parties including issuers, intermediaries, governments, even current holders of that issuer's securities.
An agency's value in the marketplace derives from its credibility with investors. And it is precisely that investor confidence which enables borrowers to maintain access to the capital markets over time.
To keep the markets informed, Moody's analysts maintain a continuous dialogue with investors. They spend time interacting with issuers and intermediaries, listening to their viewpoints, offering their opinions about the risk implications of planned debt offerings, and maintaining open, candid dialogue about the rationale underpinning their rating judgments.
In times of market stress, that deeper understanding of each issuer's risk profile can help to alleviate investor concerns, thereby helping the issuer affected to maintain market access.
When Moody's receives privileged information, we use it in our rating decisions. We also protect its confidentiality in our relationships with issuers, investors, and other market participants and observers.