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This page profiles some of the major corporate rating
agencies.
It covers -
Standard & Poor's
Standard & Poor's (S&P) dates from the 1941 merger
of Standard Statistics with the Poor company founded by
pioneering investment analyst Henry Varnum Poor (1812-1905).
In 1966 it was acquired by US publisher McGraw-Hill.
A perspective on the early days is provided by Alfred
Chandler's exemplary
Henry Varnum Poor, Business Editor, Analyst & Reformer
(Cambridge: Harvard Uni Press 1956) and Richard Sylla's
crisp 2001 A Historical Primer on the Business of Credit
Ratings (PDF).
Moody's
John Moody (1868-1958) established what became Moody's
Investors Service - acquired by Dun & Bradstreet (D&B)
in 1962 and spun off in 2000 - when he published Moody's
Manual of Industrial & Corporation Securities.
There is an account of the company in his autobiography
The Long Road Home (1933) and Fast by the Road
(1942).
Moody's status is reflected in Thomas Friedman's 1996
comment that
there
are two superpowers in the world today in my opinion.
There's the United States and there's Moody's Bond Rating
Service. The United States can destroy you by dropping
bombs, and Moody's can destroy you by downgrading your
bonds. And believe me, it's not clear sometimes who's
more powerful.
D&B
(profiled in more detail here)
dates from 1841, with the establishment by Lewis Tappan
(1788-1873) of a commercial credit service, the Mercantile
Agency. Tappan was founder of the Journal of Commerce
and author of Is it Right to be Rich? He was a
prominent Abolitionist, co-founding the American Anti-Slavery
Society in 1833 (and splitting it in 1840 - when a woman
was elected to the Society's board - declaring that it
would be "promiscuous for a lady to sit behind closed
doors with gentlemen"). In 1839 he had been prominent
in the Amistad
case. He went on to write The Fugitive Slave Bill:
Its History & Unconstitutionality, With An Acount
of The Seizure & Enslavement of James Hamlet, &
His Subsequent Restoration to Liberty and sponsor
The Emancipator newspaper.
The rough and ready nature of reporting was demonstrated
in the landmark defamation action by John Beardsley, commenced
in 1848 and lasting for 23 years, that privileged reporting
agencies and in the words of critic Scott Sandage saw
the US
sacrifice
privacy rights in the quest to separate good credit
from bad, the virtuous from the failed, the saved from
the damned.
RG
Dun was incorporated by his grandson in 1859: employees
included Abraham Lincoln, Ulysses S Grant, Grover Cleveland
and William McKinley. Its subscribers grew from 7,000
in the 1870s to 40,000 in the 1880s. By 1900 its reports
covered over a million US businesses. In 1933 Dun merged
with The Bradstreet Companies (a competitor founded in
1849).
Dun & Bradstreet, like its competitors, acquired and
shed a range of general and specialist media interests
during the 1980s and 1990s. It sold its television stations
in 1984 and bought the ACNielsen audience measurement
group (profiled here),
founded in 1923. Nielsen was spun off in 1996. Intercontinental
Medical Statistics (IMS) was bought in 1988 and spun off
as Cognizant (subsequently disassembled) in 1996. The
Official Airlines Guide was sold to Robert Maxwell
in 1988 for US$750 million. Directory printer RH Donnelley,
acquired in 1961, was spun off in 1998. Cognizant Technology
Solutions was established as the group's inhouse technology
development centre in 1994 and spun off as a software
development and maintenance services business as part
of Cognizant. In 2001 Dun & Bradstreet rebadged itself
as D&B. In 2002 it paid US$117 million for the Hoovers
information service.
There has been no major independent study of Dun &
Bradstreet, regrettable given its significance for the
rise of the modern corporation and what has been characterised
as the information economy.
For Tappan see in particular Bertram Wyatt-Brown's Lewis
Tappan and the Evangelical War Against Slavery (Baton
Rouge: Louisiana State Uni Press 1997), A Side-Light
on Anglo-American Relations 1839-58, Furnished by the
Correspondence of Lewis Tappan and Others with The British
and Foreign Anti-Slavery Society (rpr New York: AM
Kelley 1970) edited by Annie Abel and Born Losers:
A History of Failure in America (Cambridge: Harvard
Uni Press 2005) by Scott Sandage. Dun is covered in James
Norris' R G Dun & Co, 1841-1900: The Development of
Credit Reporting in the Nineteenth Century (Westport:
Greenwood Press 1978).
Fitch Ratings
Fitch
Ratings provides ratings and research to over 75 countries,
covering a wide range of securities offered by corporations,
sovereign nations and municipal/provincial government.
As of 2002 it offered ratings on 69 sovereign nations.
Fitch was acquired by Paris-based Fimalac (a furniture,
tools and chemical storage conglomerate) in 1997 and absorbed
Duff & Phelps of the US in 2000. It also acquired
Thompson BankWatch (a unit of the Thomson media conglomerate
that had initially been established by Keefe Bruyette
& Woods) and IBCA Limited, both NRSROs. It was responsible
for 25% of Fimalac's €1.2 billion sales in 2001.
In 2005 it employed around 1,500 professionals at 49 worldwide
offices and covered 3,100 financial institutions (including
1,600 banks and 1,400 insurance companies), a further
1,200 corporate issuers and 89 sovereigns (with surveillance
of over 45,000 municipal transactions).
In March 2006 US media group Hearst
agreed to acquire a 20% stake in Fitch Group (parent of
Fitch Ratings) for U$592 million, along with Algorithmics,
a provider of risk-management services acquired by Fimalac
in January 2005.
R&I
Rating & Investment Information, Inc (aka R&I)
is the largest rating agency based in Japan. It results
from a 1998 merger between the Japan Bond Rating Institute
(JBRI, established in 1979 as a spin off of the Nihon
Keizai Shimbun, Japan's major business newspaper
and associate of the Nikkei stock index) and Nippon Investor
Service (NIS, established in 1985).
In 2002 it rated nearly 74% of all Japanese issuers and
provided ongoing rating services to 795 issuers (including
104 non-Japanese entities in connection with their 4,625
issues). The securities included long term debt offerings,
medium term notes, asset backed instruments and Euro-commercial
paper. At that time it had a total staff of 145 employees,
with 61 credit rating analysts.
JCRA
Japan Credit Rating Agency (JCRA)
was established in 1985 and as of 2005 had 90 staff.
Key publications include JCR Ratings (monthly,
in English) which lists all JCR ratings and features a
summary of the rating rationale along with the issuer's
background information and JCR Kakuzuke (monthly,
in Japanese) with more detailed versions of that information.
A M Best
AM Best,
an insurance sector specialist, was founded in the US
in 1899 by Alfred Magilton Best (1876-1958).
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