Reuters: Looming S&P Decision Casts CB "Ratings Cloud"

A Reuters story (Nov. 16) depicts a still-pending decision by the Standard & Poor's regarding its rating analysis of covered bonds as "casting a cloud over the market for Europe's cheapest bank funding tool."

Controversial changes were first proposed in February, when S&P published a "request for comment" that met with much concern in the covered bond industry.  In July, S&P announced that its new rating criteria would not be published until at least September — prompting at least one observer to speculate as to whether a "flip-flop" might be in the offing.

Reuters cites unnamed bankers as stating that "a number" of financial institutions have avoided using S&P for ratings in connection with new covered bond issues this year, out of concern about possible future volatility stemming from the rating agency's still-unsettled approach.