In an effort to increase transparency concerning its credit ratings and highlight the underlying credit quality of insured bonds, Standard & Poor's announced it is publishing the underlying ratings (SPURs) on almost 20,000 municipal and corporate bond-insured issues.
The SPURs represent S&P's view of the creditworthiness of the primary obligor without regard to any form of third-party credit enhancement.
These ratings, on more than 19,000 U.S. municipal issuers and almost 1,000 corporate issuers, are available on a single site, www.spviews.com.
The file will be updated as new SPURs are released on a twice-monthly basis.
S&P's action comes just days after a competing rating service, Fitch, was hit with criticism by MBIA over its methods of evaluating the financial strength of financial guarantee insurers. MBIA asked Fitch to withdraw its financial strength rating. .
The Armonk, N.Y.-based insurer criticized Fitch's rating methods, noting that Fitch reviewed only 30 percent of its transactions while both S&P and Moody's review was over 85 percent.
Paul Coughlin, executive managing director and head of S&P's corporate and government ratings groups, said the underlying ratings it is publishing "reflect our current view of the strength and stability underlying most bond-insured issues."
"It's important to note that despite significant deterioration in the credit markets, over 99 percent of public finance and 95 percent of corporate SPURs remain investment grade. This is a tribute to the underlying creditworthiness of the issues and issuers."
In articles published today, "Standard & Poor's Underlying Ratings In Most Bond-Insured Transactions Are Strong And Stable" and "Underlying Corporate Ratings Of Insured Debt Remain Strongly Investment Grade," the rating agency outlined why the market may consider SPURs when evaluating a credit.
These factors include:
o An ability to benchmark pricing on an uninsured entity.
o Negotiating premiums for bond insurance.
o Pricing and negotiating counterparty agreements
o Comparative peer analysis.
"SPURs provide value to investors holding bond-insured paper as they seek to differentiate among issuers by underlying credit quality in the enhanced sector," said William Montrone, managing director and head of S&P's public finance ratings group.
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