I wasn't going to complain publicly about the rating agencies, but their schizophrenic behavior over guarding the professional backgrounds of their analysts from legitimate media inquiry, while taking expensive ads in the Walll Street Journal to announce promotions has simply put me over the top.
Twice a year, our distinguished "nationally recognized statistical rating organizations" like Moody's, Fitch, and Standard & Poor's, write checks in the neighborhood of $30,000 (about the cost of a single rating, for you issuers out there) to buy "tombstone" advertisements in the Wall Street Journal. These ads tell the market how proud they are that they have just promoted a new crop of bond analysts to extremely inflated titles like "senior vice president," or "managing director."
Take a look at today's
Wall Street Journal and you will see such an ad on page C2 paid for by Moody's Investors Service. Moody's named 14 senior vice presidents, 10 senior credit officers, one senior marketing officer, five vice presidents, and four assistant vice presidents.
The reason these ads are called "tombstones" on the Street is because after they are published, the advertising agency that Moody's paid to design and place the ad will then have little minature copies of the ad made up and embedded in Lucite as commemorative gifts for the people named in the ad. Wall Street people collect such Lucite "tombstones" for the deals they work on. When you get promoted, you get a tombstone.
At the bottom of the ad, Moody's reminds us that its analysts "track over $35 trillion of debt" and goes into excruciating detail about the scope of their ratings. Very impressive. The rating agencies are really the champions of full disclosure, right?
Only someone else's full disclosure. Repeated efforts by this publication to profile key analysts at the major rating agencies have been systematically thwarted by the PR people at the companies. If a rating analyst is going to have virtual life or death power over a company's ability to finance its operations in the capital markets, don't investors have a right to know more about the individuals involved in the rating process? The rating agencies all demand open governance and full disclosure from the very companies that pay fees for the ratings, but when someone asks for an interview with analysts about themselves and their background, suddenly the drawbridge goes up, and the gate to the castle is closed tight.
The agencies claim that their "rating committee process" makes individuals and their background irrelevant. If they are so irrelevant, why spend tens of thousands of dollars to publish an ad listing their names?
Here's the response from Fran Laserson, Moody's PR chief, when RatingAgency.com requested interviews with key analysts:
"I’ve heard about your new publication and we are happy to supply a list of the lead analysts for the industries you would like to cover. However, there are no “unknown powerful players” to profile at Moody’s because all of our rating decisions are made by rating committees, not individual analysts. Publicity about individual employees is not part of the Moody’s culture. The reliability and accuracy of our ratings and research is what generates the high public profile for Moody’s. "
Moody's wouldn't even give up a bio and a headshot of an analyst:
"Steve, Not trying to be difficult, but it is highly unusual for us to give out pictures and bios for articles for which we have declined to interview.
Crystal Carrafiello
VP/Manager - Rating Communications
Moody's Investors Service"
From Marjory Appel at S&P, who is an attorney by training, not a communications person:
"As for your interest in profiling individual analysts, as I'm sure you know from your years here at S&P, our focus is really not on the individual analyst and much more on our organization as a whole, the committee and our overall methodology and criteria. Unlike other financial services organizations - we don't emphasize the individual analysts because the committee process is so integral to the way we function."
I even met with Marjory's #2 at S&P, Mimi Barker, to try to engage her cooperation for the publication, and her follow-up email had the following "don't let the door hit you on the way out" feel:
"We haven't changed our decision about not making our analysts available for profiles, for all the reasons Marjory Appel noted in her email to you. As you probably know from working here, we get many requests from many outlets for profiles such as this -- in fact, we've had several in the past week alone -- and if we were to say yes to any one, then we'd have to say yes to them all. I'm sure you will understand. Thanks for coming by this way. "
In the ten years I worked at S&P, I don't recall ever turning away a news media request to interview an analyst. And this may come as a surprise, Mimi, but you can say yes to some and not to others. That's what you did with me, but your analysts still appear with regularity in the
Bond Buyer and other publications.
Fitch's Jim Jockle promised repeatedly that he would be in touch, but never made the call. The only agency to cooperate completely thus far with RatingAgency.com was Dominion Bond Rating Service, the Canadian rating agency, which not only supplied news releases, but made analysts available for phone interviews. Special thanks to Caroline Creighton at DBRS, the only rating agency PR person who didn't hide from us.
So transparency is only for the companies that come under rating agency scrutiny. The agencies themselves are only interested in being absolutely opaque. We, the public, don't get any insights into who these people are making the rating decisions.
Sure, they may operate as committees, but they are committees of individual people with core competencies and expertise. And those individuals are of interest to the market.
Henry Varnum Poor, founder of S&P, once heralded "The investor's right to know."
It's too bad the modern communications professionals at the rating agencies don't think the investors have a right to know much about them.
