Fitch Ratings yesterday launched a new ratings agency in an attempt to boost its presence in the rapidly growing market for portfolio investments backed by credit derivatives.
The move is designed to help grow its market share, which has stalled over the last two years.
Structured finance securities and collateralised debt obligations – bonds backed by portfolios of other bonds or derivatives – are among the fastest growing areas of the capital markets. Providing issuers with ratings for these products makes up a considerable portion of rating agency revenues.
Fitch Ratings’ chief executive officer, Stephen Joynt, said the launch of Derivative Fitch was an acknowledgement of the different needs of CDO investors, versus more traditional bond investors.
“We wanted to provide users with a package of portfolio analytics that is broader than traditional credit ratings, giving them a market-based view of prices, liquidity and ratings stability, as well as the fundamental research on the underlying securities,” he said.
The new agency repackages a number of research and analytics services that Fitch already provides for issuers and investors in the credit derivatives market, where the agency has been aggressively adding products over the last year.
Mr Joynt said the decision to launch a credit-derivatives focused agency was designed to promote further expansion. “Another reason for this initiative is that it may facilitate joint ventures, acquisitions or mergers with other information providers, perhaps expanding the full suite of offerings into equity derivatives.”
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