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Banks bypass S&P when rating CMBS

March 06, 2012 03:45PM

Financial research and ratings firm Standard & Poor’s has been pushed out of commercial mortgage-backed securities deals following a $15 billion sale that went south last year, Bloomberg News reported.

Last July, a massive deal between Citigroup and Goldman Sachs fell apart after S&P pulled its ratings for the securities in the deal, saying it had to review its model used in rating the assets. Now, Wall Street is pushing back, finally busting the trio of ratings agencies that have had a stranglehold on the U.S. bond market, Bloomberg said.

Not only are Goldman and Citi no longer using S&P’s ratings, the other largest underwriters, including JPMorgan Chase, Deutsche Bank and Morgan Stanley have also begun bypassing the firm.

The three major ratings firms — S&P, Moody’s and Fitch — did 97 percent of the business in their field last year, according to numbers from the U.S. Securities and Exchange Commission, Bloomberg said. [Bloomberg]