Fitch Ratings will consider the possible "harmonization" of the corporate and public finance ratings scales, a review that will now be led by chief risk officer Robert Grossman.
Grossman will lead the company in looking at the potential for bringing the two scales together or finding other solutions, one of which could involve an independent scale, Fitch said in a release. Grossman was chosen because of his broad experience at Fitch with ratings scales of many different types, said Huxley Somerville, a Fitch spokesman.
The turbulence in the auction-rate market and the ratings of bond insurers - originally meant to bring lower-rated issuers to triple-A - now acting as a drag on municipalities' credits have caused a recent furor. Recent congressional hearings and letters from prominent issuers have brought the issue into focus, with many market participants making the case for a singular ratings scale for corporates and munis.
"There's been a lot of inquiry regarding [the ratings scales], especially from issuers, and we have always said that we are willing to talk to market participants, understand their views, and perhaps take them onboard," Somerville said.
Fitch said it will work closely with market participants to "transition, reanalyze, and re-rate" the many bond issues currently experiencing market illiquidity, according to the release.
Fitch joins Moody's Investors Service and Standard & Poor's in addressing the issue.