Investors could adjust to world without Triple A Ratings?

May 29, 2009 by · Leave a Comment
Filed under: Opinion 

Yes, because they already have.  I don’t think many professional investors think that most governments or companies that have a AAA (Triple A), actually deserve them or think they are a true “safe haven”.  Right now from my observations, I would say that any triple rating is a relative rating compared to being an absolute rating of investment quality.

News (Reuters):

Where would you put your money in a world where even safe haven investments were no longer safe.  Investors are grappling with this issue as the global pool of Triple A debt ratings shrinks, battered by the credit crunch, the economic downturn, and budget-busting government spending in response to the crisis.

The decision by Standard & Poor’s last week to downgrade its outlook for British sovereign debt, threatening the country’s top-notch rating, raised the possibility that the small group of Triple A governments might lose another member.

Corporate Triple A ratings have also been disappearing. Thirty-five issuers were top-rated by S&P in 1999; today there are just eight, including pharmaceutical giant Pfizer, which is on negative watch.

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