Fitch Ratings
Looking at the history of the "Big Three" rating agencies, a certain pattern emerges: all of them appeared at approximately the same time and engaged in approximately similar activities, helping to solve most of the problems arising in the late 19th and early 20th centuries related to investment activities in the United States. And while the history of Standard and Poor's and Moody's started a little earlier and underwent various changes, associated with ups and downs, Fitch Ratings appeared a little later, having managed to take into account the problems and shortcomings of its future colleagues.
Fitch Ratings - its journey to becoming a rating agency
Fitch Ratings originated on December 24, 1913 as Fitch Publishing in New York City, founded by John Knowles Fitch. Like the early agencies, the company began by publishing financial statistics. However, unlike the early representatives, the company managed almost from the very beginning to acquire serious clients, among which were the following NYSE. In choosing the mechanisms for working with its clients, the company went down the path of creating various printed publications that would contain not only statistical data, but also possible options for preliminary reports, which ultimately led the company in the first 10 years of its existence to become a leader in the provision of statistics to the investment community. The company's publications - the Fitch Bond Guide and the Fitch Guide to Stocks and Bonds - have become increasingly popular in the U.S. and abroad among potential investors in the U.S. economy.
Rating scale from Fitch Ratings
One of the important dates in the activity of Fitch Ratings was 1924: it was at this time that the widely known rating scale from "AAA" to "D" was introduced. The need to introduce a rating scale was dictated by the growing demand for independent research on financial instruments.
The rating scale combined not only standardized indicators, but also in-depth analysis by the company's investment experts. It was this combination that led to the general recognition of this method of evaluation, which became a benchmark for the financial community when making investment decisions.
It is the stability of its activities that became the basis for the agency's global recognition, which, along with two others (S&P, Moody's), became one of the most recognized agencies in the world. the top three agencies that have received the official status of statistical rating organizations from the U.S. Securities and Exchange Commission in 1975.
New team and market depth
The next important year for Fitch Ratings is 1989: this year a new management team joined the agency and the agency began to show impressive growth. Fitch Ratings expanded its activities to include structured finance. Investors began to be provided with analytical materials containing clear explanations of the company's analysts on complex instruments or issuers, recognized as the most in-depth and accurate among all rating agencies.
In 1997, Fitch Ratings merged with London-based IBCA Limited, significantly strengthening Fitch Ratings' global presence and expanding its analytical coverage of banks, financial institutions and sovereigns. Following the merger with IBCA Limited, Fimalac S.A., a holding company that acquired IBCA Limited in 1992, became the agency's owner. This merger was the first step in the agency's efforts to meet investor demand for a full-service, alternative global international rating agency.
The next step in creating an internationally competitive agency was the acquisition in April 2000 of Duff & Phelps Credit Rating Co. headquartered in Chicago. Later that year, the Thomson BankWatch rating organization was acquired. These acquisitions allowed the agency to provide more comprehensive analytical coverage of corporate issuers, financial institutions, insurance companies and the structured finance sector. In addition, the agency was able to significantly increase the number of its offices and affiliates worldwide.
Fitch Ratings today
Today, Fitch Ratings is a credit rating agency focused on providing the global credit markets with independent and forward-looking credit assessments, analysis and data. Following this growth and acquisitions, Fitch Ratings now employs more than 2,100 people in 50 branches and subsidiaries worldwide. Fitch Ratings has two main offices, in London and New York.
In January 2008, Fitch Group announced the development of Fitch Solutions, a division specializing in data, analytical tools and related services. The objective of the development of this division is to strengthen the independence of Fitch Ratings' credit ratings and analytical research and to create a structure that is fully focused on the development of fixed income products and services. The division provides an even deeper separation between analytical and rating activities. It also creates a comprehensive and detailed platform for the distribution of Fitch Ratings' materials.
Fitch Training is part of Fitch Solutions and specializes in credit and corporate finance training for professionals in the fixed income, credit risk management and customer relationship management/ originator functions. Fitch Training provides services to a variety of financial organizations, including investment and private banks and management firms, as well as regulators. Fitch Training has a global presence as the organization's training professionals are based in the UK, continental Europe, the US and Asia.
This article is featured in the 93rd issue of ForTrader.org magazine