Moody's Investors Service announced today that, except for hybrid securities with meaningful mandatory deferral triggers, all preferred stock and hybrid securities will continue to be rated according to existing notching guidelines with no rating distinction made among cumulative, non-cash cumulative and non-cumulative obligations.
Moody's said that market reaction to the proposal was largely negative. Recurrent themes were the incentives issuers have to avoid deferring payments on any hybrid security and the lack of strong statistical evidence supporting greater notching for non-cumulative securities. Having considered the points made by respondents, Moody's decided not to adopt the proposal, and to keep its notching conventions largely unchanged.
While there may be further refinements, we now expect the revised guidelines to be adopted Jerome Fons, Managing Director for Credit Policy
said Jerome Fons, Managing Director for Credit Policy at Moody's.
We would like to thank all market participants who responded to our request for comment. Jerome Fons, Managing Director for Credit Policy
