The arranger, acting on behalf of a special purpose entity, first unpacks the pool of asset-backed securities handed over to it by the originator. – With the help of a rating agency’s experts, the risks are then mixed and repackaged into tranches, which the rating agency involved can now assign a rating based on the respective risk content in advance. – With this rating behind him, the arranger can now go on a roadshow. – The adjustment of the individual securitization instruments to the desired rating and the involvement of the rating agencies in the compilation of the tranches have often been criticized. However, to the extent that this involves a conscientious examination of the risks, there is hardly anything to object to. Moreover, no one is forced to rely on the rating judgment of an agency. – See arranger, development process, iterative, rating agency, legal requirements, rating disclosure, rating grades.
Rating migration: A term that emerged around 2008 to describe the sudden sharp downgrading – of entire classes of securities, especially structured financial products; this was sometimes also referred to as a roller coaster ride, as well as – of the credit ratings of companies or issuers. – It should be noted that, according to the guidelines of the Basel Committee on Banking Supervision, ratings serve as a starting point for determining the necessary equity capital. A change in the rating of a security by one notch can already result in a quadrupling of capital requirements for a bank. – See credit rating, downrating, insolvency cases, Plutoed, product registration, rating agency, legal requirements, rating steps.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/