Morningstar accounts for just 0.1% of the credit-rating market. This will rise to 2.4% once the DBRS deal closes. By contrast, the big three of S&P Global, Moody’s and Fitch have a combined 96 per cent.
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Morningstar takes aim at rating giants with $669m DBRS deal
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Rating agencies were thrust into the spotlight after the financial crisis, when critics complained that their ratings on mortgage-backed securities were inflated to win business, misleading investors who had relied on them to provide a good guide to the risk of default. In 2015 S&P paid $1.4bn to settle claims over its role in the run-up to the crisis, while Moody’s paid $864m. Yet this did not loosen their stranglehold on the market. “They clearly had a lapse a decade ago with mortgage-backed securities but it was isolated to that part of the bond market and didn’t change how bond managers viewed them,” noted Mr White.
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