International Markets-"SmartTrade Group"- (Moody's Ratings Lack Credibility)...

Online, March 16, 2010 (Newswire.com) - "SmartTrade Group" analysts believe that the judgment of the three main credit reference agencies, S&P, Moody's and Fitch Ratings, should be regarded as flawed given the failure of the their ratings to protect investors who bought collateralized debt obligations (CDOs) that were rated AAA but proved to be laced with subprime poison.

Nevertheless, the analysts concede that as large investors like pension funds can only buy securities that are given the top rating by the credit reference agencies, their role in global finance in general and the rating of sovereign debt in particular will remain significant.

Moody's has released a report on the financial position of the UK, US, France and Germany in which it said that the 4 major developed economies are well positioned to keep their AAA sovereign credit ratings.

"SmartTrade Group" analysts apparently said that the statement was completely at odds with warnings Moody's and S&P recently issued to the UK concerning the country's ballooning budget deficit and added that the assertion was tantamount to "a flip-flop".

"SmartTrade Group" sources suggested that although the loss of AAA rating on its sovereign debt could cost the UK dearly, smaller investors would be wise to ignore AAA ratings from the 3 main agencies on structured debt instruments until such time as the manner in the agencies are remunerated is fundamentally overhauled, alluding to the fact that they were paid by the sellers of CDOs to give top ratings to products they knew were flawed.