The chief executive of Moody’s said on Friday he recognizes the seriousness of questions raised by media reports about an error in a model the ratings agency uses in certain European debt ratings, Reuters reports.
In a letter to customers that was obtained by Reuters, CEO Raymond McDaniel said he will act “quickly and decisively to address any need for changes” to the way Moody’s assigns ratings.McDaniel also said it “is inconsistent with Moody’s analytical standards and company policies to change models and methodologies for any reason other than to improve the accuracy of our ratings.”
The Financial Times on Wednesday said a coding error in a computer model resulted in some products being awarded ratings up to four notches higher than merited.
Moody’s said it had hired law firm Sullivan & Cromwell to review its rating process for the securities.Standard & Poor’s said on Thursday it may cut Moody’s Corp’s commercial paper ratings, a move that could limit its access to certain debt markets.
Moody’s shares closed down 1.01% on Friday at $34.16 amid a broader market decline.