Standard & Poors has entered into an alliance with Complex Security Valuations Inc. (CSV) to extend the firms capabilities pricing illiquid securities and hard-to-value structures.
Speaking to a group of journalists at Standard & Poors downtown New York offices, J.R. Rieger, vice president, global evaluations of Standard & Poors said the motivation for such an alliance is driven by the growing sophistication needed to properly mark-to-market portfolio holdings and the number of complex instruments clients are now investing in.
To help meet clients increasingly complex valuation needs, Standard & Poors and CSV said the alliance will allow the duo to offer a more comprehensive and sophisticated independent pricing service and client support, including direct access to valuations specialists.
CSVs valuation process incorporates market research, academic papers and industry practitioner journals to reverse-engineer primary market supplied pricing within its validation process. CSV will offer audit trails of the assumptions and theoretical underpinnings of its models to equip clients with defensible, documented and expertly derived pricing methodologies.
With the addition of CSVs valuations methodologies, Standard & Poors says it will now be able to provide extended coverage of high yield bonds and complex structured products, including such illiquid securities as CDs, interest rate swaps, credit default swaps, CDOs, CLOs and European structured finance bonds. This corresponds to the increased demand Standard and Poors has noted for independent valuation of such products from mutual fund and hedge fund clients.
With this alliance, clients can access end-to-end global valuation services supported by a technologically sophisticated model-based pricing process, says J.R. Rieger, Vice President, Global Evaluations of Standard & Poors. Rieger went on to explain that the alliance will simplify the client experience with Standard and Poors as clients will not need to program for, and support, multiple feeds for pricing data.
Perry Beaumont, the global head of marketing for CSV, expressed similar views when explaining the benefits of the alliance.
For CSV, the single word that best captures the power of the alliance is simplicity, he said in explaining the alliance will simplify the experience of valuation users by providing a single industry touch point for all securities, a single set of methodologies and a single mode of delivery.