Saturday, November 27, 2010

S&P Rating vs. CDS Implied Rating of European Sovereign Credit; Huge Flaws in the Bond Rating Methodology

"An interesting article by Index Universe shows how Ratings Differences Highlight Eurozone Risk.

The article compares risk as measured by a Standard and Poor’s rating vs. a CDS rating that is calculated based on credit market derivatives. A table highlights the differences.

Where the CDS-implied rating is better than that given by S&P, the difference is a positive number. When the CDS-implied rating is worse, a negative number is the outcome.

Some of the differences are enormous..."

at http://globaleconomicanalysis.blogspot.com/2010/11/s-rating-vs-cds-implied-rating-of.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

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