The 20 Rising Stars of Fixed Income 2008

SPONSORED ARTICLE How Do You Rate? Getting the most out of your ratings database with Vhayu Velocity By Philip Perrault, Senior Implementation Manager A side firms will be forced to write down billions of dollars of securities. They also are vital when calculating value at risk (VaR) on collateralized debt obligations (CDOs) and credit default swaps (CDSs) that some consider worthless. Ratings, however, cannot always be relied upon. There also has been a lot of noise in the press regarding incorrect ratings. Even government and municipal bonds could face a downturn if the current market situation continues. Now more than ever, sell-side financial institutions need to work out for themselves which securities are triple-A rated. Further, to calculate risk in these volatile times, they must increase the volume and complexity of the historical analysis they perform. In order to do this, models and scenarios must be created with ratings in place. A Question of Consistency Another problem is the quality and consistency of ratings data. Often, firms simply do not have access to ratings for all their securities. Or, if they have the ratings, they have not kept them up to date. On top of this, each department will have its own database that assigns a different rating to a particular asset. To really get a grip on their exposure and value at risk, financial institutions need to be in a position to create a centralized database of these internal and external ratings and use this to create one overall rating. The crux of the problem is that banks have millions of pieces of collateral. And because of this, they simply cannot manage ratings queries manually. To acquire the level of detailed information needed to help researchers calculate and examine a yield curve, they need to develop automated processes that will help them identify a rating for each asset, ensure it is the correct rating and MAY 2008 S THE FINANCIAL MARKETS become ever more volatile, the financial ratings issued by agencies such as Moody’s Investors Service, Standard & Poor’s and Fitch Ratings are changing on an almost daily basis. And, as sell-side firms become increasingly risk-conscious, they need to make sure that the ratings they use to calculate risk and create trading scenarios for fixed-income securities are readily available. There are two main barriers. The first is that few – if any – sell-side firms have real-time access to ratings. The second is that, although many firms have their own internal ratings databases, they are often dated, siloed and inaccessible. Vhayu Technologies is leading the way in encouraging financial institutions to create a centralized mass data store to improve the accessibility of their ratings data. Not only is our system, VelocityTM, designed to capture and store large volumes of information, we also have the expertise on hand to help firms ensure the quality and accuracy of their data. Ratings and Fixed Income So, how important are ratings when it comes to fixed income? In one word: vital. If we take the current subprime crisis as an example, many mortgage insurers risk losing their triple-A rating. If that happens, sell10 FIXED INCOME RISING STARS

Table of Contents Feed for the Digital Edition of The 20 Rising Stars of Fixed Income 2008

The 20 Rising Stars of Fixed Income 2008 Table of Contents From Bad to Worse Another Disappointing Year for Comp How Do You Rate? 20 Rising Stars of Fixed Income Mentors’ Page

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.