Despite continuing criticism of the big credit ratings agencies, the challenges facing potential competitors to the big three – Fitch, Moody’s and Standard & Poor’s, remain significant.
A new Harvard Business School case study suggests new entrants effectively face a “Catch 22″ situation.
Morningstar and Meredith Whitney Advisory Group are attempting to make inroads, focussing on corporate and municipal bonds, respectively. Now comes Kroll Bond Rating Agency, founded by Jules Kroll, a pioneer of the corporate risk consulting and privacy security industry. Kroll’s initial focus is on commercial mortgage-backed securities and other structured and public finance.
The HBS case notes that:
Other challenges facing new entrants include hiring enough skilled analysts and support staff quickly enough.
The full HBS Case Study on Kroll can be purchased here.