Standard & Poors (S&P), a provider of financial market intelligence, launches the Rating Review Triggers (“Triggers”) tool on its ABSXchange platform to upgrade transparency of structured finance instruments.
The offered application is significant addition to the ABSXchange platform since it was acquired by S&P in September 2007. The platform is run by S&Ps new business unit, Fixed Income Risk Management Services (FIRMS), which is separate from S&Ps ratings business.
Triggers tool is analytical part of European RMBS surveillance which is available for free to the marketplace. The capacity provides a visual indicator of credit performance to denote a transaction’s trends across two positive and four negative tests. The positive tests assessed are pool factor and credit enhancement ratio, while delinquency ratio, delinquency growth, cumulative loss growth and cumulative loss ratio are monitored as negative tests. At a certain test threshold, Triggers notifies the user that a transaction will need to be reviewed and raises the possibility of a rating review. If all the positive or negative tests are met, it prompts a review by the analysts based on the transaction’s overall performance.
Triggers application is a step taken by S&P to boost transparency of structured finance instruments by supplying detailed information about assumptions and stress tests.
The launch of Triggers on ABSXchange is further evidence of our commitment to increasing transparency in structured finance at a time when insight and risk mitigation have never been more important, says David Pagliaro, director, Standard & Poors. ABSXchange plays a central role in research, trading, risk and portfolio management activities and sets the standard for ABS analytics. S&P will continue to enhance its functionality to anticipate the demands of a rapidly evolving market.
L.D.