Many are familiar with the big three credit rating agencies – Standards & Poor’s, Moody’s and Fitch – however for those who follow the global finance markets Weiss Rating Agency has developed a reputation for issuing accurate ratings. How credit rating agencies contributed to the global financial debacle is well documented – see Dr. Justin Robinson’s BU presentation. In comparison it is interesting to observe the track record which Weiss has developed.
Today (16 July 2011) Weiss made the financial news when it downgraded United States Debt to C-Minus, a bold move when the politics of global financial markets is considered. Regrettably this is not news to be found in the local media. The downgrade by Weiss given its spiffy track record; they have had twice the number of US Banks under watch than the Feds. While several banks have gone under that were not* on the Feds Watch List, not one has gone belly up that Weiss had neglected to signal caution, bear in mind our dollar is pegged to the US dollar. What should add to the concern for Barbados is the protracted debate by the US legislature concerning budget cuts and raising the debt ceiling.
Here is what Weiss had to say in its press release earlier today, the government of Barbados and Governor of the Central Bank particularly should take careful note:
JUPITER, Florida (July 15, 2011) — Weiss Ratings, an independent rating agency of U.S. financial institutions and sovereign debts, has downgraded the debt of the United States government from C to C-minus.
The C-minus rating for the U.S. reflects a continued deterioration in the eaknesses cited in the Weiss Ratings release of April 28, 2011, including heavy debt burdens, shaky international stability, and poor economic health.
Weiss Ratings senior financial analyst Gavin Magor commented: “Our downgrade today is not contingent on the outcome of the debt ceiling debate in Washington. It is driven exclusively by the numbers, which indicate that, in addition to a decline in the long-standing weaknesses we noted three months ago, the U.S. has already lost the golden halo that helped guarantee liquidity and acceptance of its government securities in global markets.”
On the Weiss Ratings scale, which ranges from A (excellent) to E (very weak), a C-minus rating is the approximate equivalent of a triple-B-minus on the scales used by other credit rating agencies, or approximately one notch above speculative grade (junk).
For the Weiss Sovereign Debt Ratings on all 49 countries covered, click here. For more information on the Weiss Ratings approach, refer to our white paper, “Introducing The Weiss Sovereign Debt Ratings.”
About Weiss Ratings
Weiss Ratings, the nation’s leading independent provider of financial strength ratings on banks, credit unions, insurance companies as well as sovereign debt ratings on 49 countries, accepts no payments for its ratings from rated entities. By adhering to its independent business model, Weiss outperformed Standard and Poor’s, Moody’s, A.M. Best and Duff & Phelps (now Fitch) in warning of future life and health insurance company failures according to a 1994 study by the U.S. Government Accountability Office (GAO), while also outperforming its competitors in identifying the safest insurers, according to its follow-up study using the GAO’s research methodology. Similarly, Weiss was the only one to identify, in advance, nearly all major banks that failed or required a federal bailout in the 2008-2009 debt crisis.