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many developing nations now place their bonds at rates higher than developed yet their grades from S&P, Moody and Fitch are far far lower.

This is a red herring - credit ratings are supposed to be indicative of the default risk, not a guide to picking the best investments (something that would depend on your individual risk preference even if risk could be objectively analysed).

There's no doubt that the ratings agencies are political actors - indeed there's no way they can't be political actors. Equally, there's no doubt that they are deeply corrupt. But demanding that they upgrade debt because of higher interest rates is nonsense - at best, the interest rate is irrelevant to the credit rating; at worst, higher interest rates drive up default risk, thereby worsening the credit rating.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Apr 26th, 2010 at 07:03:48 PM EST
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