Having completely failed investors at the most critical time in generations by comprehensively misjudging the credit risk of CDOs and other exotic structured instruments, the three major credit ratings agencies (CRAs) now seem to be overly anxious not to be accused of being asleep at the wheel with respect to the Eurozone sovereign debt crisis.
S&P on May 23rd changed its outlook on Italian public debt from stable to negative and all of the agencies seem to be trying to differentiate between different shades of "junk" in regard to Greece's debt.
In the case of sovereign debt the CRAs might want to think of a new category somewhere between investment grade and default which would be equivalent to the need for creditors - in most cases private sector banks - to seek a bail out from their respective domestic public sectors.
Mervyn King once observed that the world's major banks
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Monica Keena Anne Marie Kortright Paige Butcher Amanda Peet Xenia Seeberg
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