Moody’s Joins Fitch Slamming Subprime Auto Bonds: Credit Markets
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The booming market for securities backed by subprime car loans is riskier than their ratings imply, say two of the biggest assessors of bond credit quality.
Moody’s Investors Service and Fitch Ratings analysts said in interviews that the grades their competitors have assigned to a crop of new issuers -- most of which are backed by private-equity firms -- are too high. The lenders lack a track record in the bond market proving their underwriting acumen and ability to handle the specialized task of collecting on soured debt during a downturn, according to the analysts.