Credit rating agencies (CRAs) assess the creditworthiness of debt
issuers on financial markets. They are private companies and the ratings
they issue are judgements about the prospect of repayment of debt by an
issuer in time and in full. A rating is not an investment
recommendation, but it is an opinion about the creditworthiness of a
financial product or an issuing bank, government, supra- or sub-national
institution.
In recent years CRAs have gained an authority in bond markets that far
surpasses their original design. The financial crisis of 2008 thrust the
CRAs into the spotlight as their highly rated financial products turned
out to be toxic assets. CRAs were blamed not only for their excessively
optimistic ratings, but also for their complicity in creating them.
This short book introduces and explores the complex world of the credit
rating industry: how it works, how it has evolved, the role it played in
the financial crisis, and how it is regulated. Giulia Mennillo shows, as
constitutive actors of global financial capitalism, CRAs have a social
and political relevance that reaches well beyond finance into areas of
transport, infrastructure, education and health and their impact is
emblematic of the increasing financialization of our world.
