Subprime mess hits rating agencies; Shares of Moody's, S&P wilt as hybrid securities dry up.(News)

Crain's New York Business, July, 2007

Byline: Aaron Elstein Cascading prices of oceans of securities backed by subprime mortgages are exacting a heavy toll on the world's two top credit-rating agencies--Moody's Investors Service and Standard & Poor's. Shares of New York-based Moody's and McGraw-Hill Cos., the parent of S&P, have both fallen more than 10% this month alone.

Investors fear that the hugely lucrative business of rating such exotic financial instruments will dry up. Meanwhile, a Moody's shareholder filed a suit earlier this month alleging that a top executive had misled investors about ratings of subprime debts, and lawyers for the holders of billions of dollars worth of those securities say they are preparing to do the same. "It's a bunch of different problems all at once for...

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