70 if no vr etshtei giastseu we rh ient hdeerc ti hd ei ndg etgor edei socfl oc soemopnl eex oi try twwiot hci nr etdhi et rCaLtOi n ag ss s ae tt ci sl as us sa nmc ae t taenrds ws ehc eutrhi tei re si. nAvne setmo rpsi rvi caal ul ei n vdeusat li graat ti oi nng os f ot hv ei sr i sssi nu ge l ies irma tpi nogr st a ni nt bperci caiunsge cc oo mm pp ll ee xx products are difficult and time-consuming for investors to evaluate and, as a raensduhlte, nincveebsetovruslninercaobmleptloexcrperdoidt uracttisnmg raiyskb.e tempted to rely on credit ratings Innu mt hbee rl i toef rraat tui rneg, s t awnod dh oo mw i Cn Ra nAts tmh ea oy rdi ei ss p hl ayyp mo t ahreksei zt eb ehhoawv i oi srssutehrast cghi voeo rs ies et ht oe credit rating risk for investors. The first, rating shopping, hypothesizes that CLO iosns euse. r As cscool ircdi it nrga ttion gt sh ef r roamt i nmg usl thi op pl ep iCnRgAhs yapnodt hoens liys , dcirsecdl oi ts er at thi en gmroi ss kt fda ov oe sr anbol et nd iesccel sossai nr igl yo nel my tahnea mt e o fsrtof ma v oCr Ra bAl ebreaht ianvgi oerv ebnu itf Cr aRtAh se ra pf pr ol ymb ei ss ts ue fefrosr t ss etloe catsi sveesl ys at hsee Ec uu rr iot py ’esatnr uUen ci or end(iEt Uq )u ahlai tvye. Ts ohue gDh ot dt od -rFerdauncke At hc te ianbti hl i et yUoSf , ias ns ud erresgtuol asthi oo np sf oi nr rr aa tt ii nn gg ss . fIonr mt hael lDy osdodl i-cFi treadn kt oACc tR, ACsD. OS i inscseu e2r0s1a3r, eErUe qr eu gi ruel da tti oo nr se pr oe qr tu ti hr ee irsessuuelrt ss oo ff structured finance securities to disclose at least two ratings.20 The second theory is named rating catering and posits that CRAs may succumb to competitive pressures and inflate their credit ratings to gain revenue and market share. According to the rating catering theory, each CRA is seen to stretch its standards to match possible competitors in a ‘race to the bottom’ where deals rs ee ceeGi voel amn oerte afl a. , v2o0r a1b4l)e. Ar ant iunmg sb ears oCfRsAt us dcioe ms tpheat te f foocru sme adr ko ent t shhea rr ue n(-fuopr tCoDtOhse, 20o d n i s R c c e l r g o e u s d e la i d t t i f r o o a n r t s i n n i e g n w s t . l h y I e n i s E 2 s U 0 u 1e a d r 3 e , s a t t h r im u e c e E t d u U r a e i t m d p p p ro r le o m m d o u e t c n in t t s g e ( d aE a h u i r n g o h e p w e e r a r l n e e v U g e u n l l i a o o t f n i i o , n n 2fo 0 t r 1 h m 3 a ) t a . trieoqnudi ri secsl oast ulreea satn dt wr oe dcurceidnigt or av teirn-gr es l itaonbc ee
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