Fitch Ratings' Robert Grossman earlier this month left his post as head of U.S. public finance to become co-head of the rating agency's global financial institutions group, the company confirmed Monday.
Fitch has named Richard Raphael interim head of the U.S. public finance group, a spokesperson said.
Grossman, named to his new post effective Jan. 15, took over the public finance team last March to lead an effort to consider rating public finance and corporate debt on a single scale. Last July, the company published an exposure draft detailing a possible plan to harmonize ratings, but deferred its decision on a solution in October amid the broader market turmoil.
Fitch continues to monitor the market and said it will revisit its plans for a global scale this quarter.
All three rating agencies last year came under pressure from politicians who claimed issuers got stuck with higher interest rates and costly credit enhancement because the credit agencies systemically rated the debt of municipal issuers lower than corporate debt with similar or lower rates of default.
California Treasurer Bill Lockyer - the rating agencies' most vocal critic - has argued the problem was most acute in the short-term market, where the Securities and Exchange Commission's Rule 2(a)-7 requires money market funds to keep paper rated double-A or higher.
Moody's Investors Service last year announced its own plans to move to a global scale, but delayed them Oct. 7, the same day as Fitch. A spokesman said the plans are still on hold.
Standard & Poor's maintains it has always had a single scale, but last year upgraded more than a thousand credits as part of a "recalibration" based on a recently updated default study.
Moody's estimated state and local general obligation credits would average upgrades of two notches under its proposed global scale. Fitch said in its exposure draft that it expected 86% of state and local GO credits to be rated in the AA or AAA categories under its global scale, compared to 58% under its current system.
Even the upgrades aren't without their critics, however. Some have argued that it is inappropriate for the rating agencies to perform massive upgrades of municipal credits at a time of increasing financial stress for municipalities. In addition to the economic crisis, issuers face other long-term budgetary pressures, such as pension costs and other post-employment benefit obligations, as well as infrastructure spending.
Others have also noted that a boost in ratings might not have a huge impact on bond pricing, since the risks underlying the bonds will remain the same no matter the rating.
