After the going live of Wikirating in October and some articles about our project in few blogs and online newspapers, we have received many reactions and comments. This is absolutely great!
We have also realized how sensible this topic is.
As contrary to the general opinion, we do not really blame the rating agencies for the current situation on the debt crisis of many European countries and of the U.S debt as well. We do not see ourselves as enemies, nor discloses to the rating agencies. Not even as competitors.
At the end, the rating agencies are doing their job, which is assessing the risk of investing in governments’ bonds and on companies’ shares. We can surely raise the question if they are doing a good job or not… mostly the are (well, nobody really knows actually), sometimes they don’t (with dramatic consequences… remember the subprimes and the overrated toxic CDS?)… But finally, shouldn’t be the investors to be blamed, who blindly follow the ratings issued by the big 3, whereas these rating are supposed to be “opinions” only?
The real issue is that the investors have no other choice. The rating agencies are the only “institutions” (or should we call them companies?) that are assessing risks for the investors. The real problem is that there is no alternative to the current credit rating industry.
As previously mentioned, Wikirating is not a competitor to the rating agencies but an alternative. An alternative which allows to compare, and hopefully to leverage the credit ratings issued by the rating industry.
Since few days, Wikirating has raised awareness and provoked many reactions and comments. Many of these feedback are very positive (thank you!) some other very skeptical. This is absolutely fair and understandable to doubt about an initiative were anybody can contribute and give opinions about credit ratings. This is a serious matter, only experts should rate!! Yes, it is a serious and complex topic, it requires finance skills to seriously analyze and assess risks. And the experts of S&P, Moody’s and Fitch have these skills, no doubt about that. But our answer to the skeptical people is that, finally, an alternative is proposed. The ratings issued, reviewed and sharpened by the community on Wikirating are not supposed to replace the ratings of the big agencies. And they never will! The ratings issued on Wikirating are supposed to allow investors, banks, portfolio managers, risk managers… to compare the ratings of the well established agencies with ours. Today, and until the Wikirating community will grow, it is not possible to perform comparisons of credit ratings. See how the big 3 agencies do align their ratings and even their outlooks on each others! Ratings emitted by a community of members, experts or not, finally allow comparisons.
If you understand how important it is to have an alternative in the credit rating industry, then it might not be really relevant anymore to ask yourself which rating is better or more reliable than the other . Important is to make a decision! And decisions are always easier to take when you can compare.
Because, at the end, credit ratings consumers still should take the responsibility of following these ratings or not in their investment decisions.