May 14 (Bloomberg) -- Moody's Investors Service plans to add new rankings for collateralized debt obligations to show their ``sensitivity'' to market declines after the securities contributed to $335 billion of bank losses and writedowns.

Ratings of CDOs, which pool bonds, loans and other assets, will include a score indicating the risk of price declines triggering losses and downgrades, the New York-based firm said in an e-mailed statement today. Moody's will also signal any uncertainty it has about the assumptions used to rate CDOs.

Moody's, Standard & Poor's and Fitch Ratings have come under scrutiny from lawmakers and regulators for assigning top rankings to debt that later slumped to as little as 10 cents on the dollar. The change in CDO ratings is one of the first overhauls at Moody's since Chief Operating Officer Michel Madelain began taking over day-to-day management of the company this month, replacing President Brian Clarkson.

``These two measures will provide more clarity about the credit characteristics of structured finance ratings,'' Madelain, 52, said in the statement. ``They will provide investors greater insights into the risks of structured finance products.''

Ratings Overhaul

While Moody's is adding new grades to CDOs, it plans to stick with the ratings scale created by founder John Moody a century ago as its main indicator.

Moody's indicators will be introduced ``gradually'' starting at the end of June, it said in the statement. The additional grades will only apply to new issues.

Moody's sensitivity gauge will indicate the number of steps a security's credit ranking may drop if the value of its underlying assets falls to ``highly stressed'' levels.

The other new measure, known as the Assumption Volatility Score, grades the potential for ``significant'' changes in debt ratings because of incomplete data or incorrect assumptions on the complexity and market value of securities. The ``V score'' will rank deals on a scale of one to five, Moody's said.

``Investors want more information about structured finance and ratings, and about the ratings process,'' Noel Kirnon, global head of structured finance at Moody's in New York, said in a telephone interview. ``We're giving an insight into how we rate, an insight into ratings stability and transition risk.''

Moody's received comments on its plans from more than 200 investors holding more than $9 trillion of fixed-income securities in total, the company said.

The report, titled ``Introducing Assumption Volatility Scores and Loss Sensitivities for Structured Finance Securities,'' was published on Moody's Web site today.

S&P said last week it will keep a single credit ratings scale for all the markets in which it operates including municipal bonds, corporate debt and CDOs.

To contact the reporter on this story: John Glover in London at johnglover@bloomberg.net

Last Updated: May 14, 2008 10:57 EDT