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Big Three ratings agencies could face a new competitor

Much-maligned and even accused of responsibility for the credit crisis of 2007, the credit ratings agencies could soon have a new headache to contend with as US regulators have approved a new service to challenge the Big Three
Big Three ratings agencies could face a new competitor
Measuring up companies faces its own measure up

Much-maligned and even accused of responsibility for the credit crisis of 2007, the top global credit ratings agencies could soon have a new headache to contend with as US regulators have approved a new service to challenge the Big Three.

US securities regulators approved an application from a Morningstar subsidiary to offer credit ratings on companies and financial institutions, an activity that has long been dominated by S&P Global Ratings, Moody’s and Fitch.

Morningstar, which is best known for its one-to-five star ratings on mutual funds, has steadily expanded its credit rating business since the financial crisis, although its principal focus has been on the structured finance universe.

The approval last week from the Securities and Exchange Commission and announced today grants the company the ability to offer credit rating opinions on companies and banks as a nationally recognised statistical rating organisation too.

Japan and China already have their own credit ratings agencies but the latest applicant is the latest from the US or Europe and could pose a larger threat to the established brands.

 

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