CMBS, CRAs and CRA3
A recent CMBS conduit issue by JP Morgan prompted a rather unusual action from Moody’s. To ‘our’ banks – seeking to revive hitherto quiet markets – this may introduce an additional layer of uncertainty.
The upcoming European ‘CRA3’ regulation is not likely to help; to us, some of the proposals appear fundamentally flawed.
In our view, the market is the only proper arbiter of the accuracy of CRA ratings. CRAs could, for example, be required to publish their historical performance in a pre-defined – and harmonised – format, leaving investors to make their own choices.