Market dynamics associated with credit ratings: a literature review.

Credit ratings produced by the major credit rating agencies (CRAs) aim to measure the creditworthiness, or more specifically the relative creditworthiness of companies, i.e. their ability to meet their debt servicing obligations. In principle, the rating process focuses on the fundamental long-term credit strength of a company. It is typically based on both public and private information, except for unsolicited ratings, which focus only on public information. The basic rationale for using ratings is to achieve information economies of scale and solve principal-agent problems. Partly for the same reasons, the role of credit ratings has expanded significantly over time. Regulators, banks and bondholders, pension fund trustees and other fiduciary agents have increasingly used ratings-based criteria to constrain behaviour. As a result, the influence of the opinions of CRAs on markets appears to have grown considerably in recent years. One aspect of this development is its potential impact on market dynamics (i.e. the timing and path of asset price adjustments, credit spreads, etc.), either directly, as a consequence of the information content of ratings themselves, or indirectly, as a consequence of the “hardwiring” of ratings into regulatory rules, fund management mandates, bond covenants, etc. When considering the impact of ratings and rating changes, two conclusions are worth highlighting. – First, ratings correlate moderately well with observed credit spreads, and rating changes with changes in spreads. However, other factors, such as liquidity, taxation and historical volatility clearly also enter into the determination of spreads. Recent research suggests that reactions to rating changes may also extend beyond the immediately-affected company to its peers, and from bond to equity prices. Furthermore, this price reaction to rating changes seems to be asymmetrical, i.e. more pronounced for downgrades than for upgrades, and may be more significant for equity prices than for bond prices. – Second, the hardwiring of regulatory and market rules, bond covenants, investment guidelines, etc., to ratings may influence market dynamics, and potentially lead to or magnify threshold effects. The more that different market participants adopt identical ratings-linked rules, or are subject to similar ratings-linked regulations, the more “spiky” the reaction to a credit event is likely to be. This reaction may include, in some cases, the emergence of severe liquidity pressures. Efforts have recently been made, notably with support from the rating agencies themselves, to encourage a more systematic disclosure of rating triggers and to renegotiate and smooth the possibly more destabilising forms of rating triggers. However, the lack of a clear disclosure regime makes it difficult to assess how far this process has evolved. Questions also remain as to the extent to which ratings-based criteria introduce a fundamentally new element into market behaviour, or, conversely, the extent to which they are simply a va riant of more traditional contractual covenants. Rating agencies strive to provide credit assessments that remain broadly stable through the course of the business cycle (rating “through the cycle”). Agencies and other analysts frequently contrast the fundamental credit analysis on which ratings are based with market sentiment — measured for example by bond spreads — which is arguably subject to more short-term influences. Agencies are adamant that they do not directly incorporate market sentiment into ratings (although they may use market prices as a diagnostic tool). On the contrary, they make every effort to exclude transient market sentiment. However, as reliance on ratings grows, CRAs are being increasingly expected to satisfy a widening range of constituencies, with different, and even sometimes conflicting, interests: issuers and “traditional” asset managers will look for more than a simple statement of near-term probability of loss, and will stress the need for ratings to exhibit some degree of stability over time. On the other hand, mark-to-market traders, active investors and risk managers may seek more frequent indications of credit changes. Hence, in the wake of major bankruptcies with heightened credit stress, rating agencies have been under considerable pressure to provide higher-frequency readings of credit status, without loss of quality. So far, they have responded to this challenge largely by adding more products to their traditional range, but also through modifications in the rating process. The rating process and the range of products offered by rating agencies have thus evolved over time, with, for instance, an increasing emphasis on the analysis of liquidity risks, a new focus on the hidden liabilities of companies and an increased use of market-based tools. It is too early, however, to judge whether these changes should simply be regarded as a refinement of the agencies’ traditional methodology or whether they suggest a more fundamental shift in the approach to credit risk measurement. For the same reason, it is not possible to draw any firm conclusions about changes in the effects of credit ratings on market dynamics.

Air Traffic Simulation Technology for High-Population Metroplexes

IAI's MetroSim optimizes air traffic by simulating departures, arrivals, and activity in air and onthe ground in busy metroplexes, where flights impact each other at a single airport and among traffic at nearby airports. MetroSim evolved out of several NASA SBIR/STTR Awards and has since been used by NASA for flight simulation analysis. MetroSim has also been integrated with FAA and DOT technology, has produced studies for the Port Authority of New York and New Jersey, and is under development to support the Nav

Analytical performance of the selective multianalyser Olympus AU 5200

The analytical performance of a selective, automatic multianalyser- the Olympus A U5200 - was tested and assessed for practicability, following ECCLSguidelines. Twenty-two analytes were tested and compared with the Olympus A U5000 analyser. A Hitachi 747 analyser was also included in this survey in order to obtain correlation data for ISE measurements

Surface characterization

The biocompatibility of commercially pure titanium and its alloys is closely related to their surface properties, with both the composition of the protecting oxide film and the surface topography playing an important role. Surfaces of commercially pure titanium and of the two alloys Ti-6Al-7Nb and Ti-6Al-4V (wt %) have been investigated following three different pretreatments: polishing, nitric acid passivation and pickling in nitric acid-hydrogen fluoride. Nitric acid treatment is found to substantially reduce the concentration of surface contaminants present after polishing. The natural 4-6 nm thick oxide layer on commercially pure titanium is composed of titanium oxide in different oxidation states (TiO2, Ti2O3 and TiO), while for the alloys, aluminium and niobium or vanadium are additionally present in oxidized form (Al2O3, Nb2O5 or V-oxides). The concentrations of the alloying elements at the surface are shown to be strongly dependent on the pretreatment process. While pickling increases the surface roughness of both commercially pure titanium and the alloys, different mechanisms appear to be involved. In the case of commercially pure titanium, the dissolution rate depends on grain orientation, whereas in the case of the two alloys, selective α-phase dissolution and enrichment of the β-phase appears to occur. © 1999 Kluwer Academic Publisher

Small and Large Faculty-size Adjusted Accounting Program Rankings Based on Research-active Faculty: A Uniform Approach

Prior studies have ranked accounting programs based on the use of various methodologies, many of which did not control for faculty size. Even in studies that controlled for faculty size, a common issue was the inclusion of faculty and PhD students who were not research active. To resolve these sample issues, this study uses a sample of top-6 accounting journal publications over the 2006-2013 period to demonstrate an innovative, efficient, and uniform approach for calculating faculty-size adjusted accounting program rankings. This approach can be modified to include more accounting journals. Specifically, the study controls for faculty size by including only active researchers at each school: that is, authors who published during this period in one or more of the top-6 accounting journals. Consistent with prior studies, the analyses reveal that controlling for faculty size results in statistically significant changes in program rankings. Other study innovations include separate rankings for large (over 13 faculty members) and small (from 3-13 faculty members) accounting programs. Small school rankings, which have not been the focus of prior research, may provide programs with limited size an important measure of their quality that is potentially useful in recruiting faculty and students

Architecture of coatomer: Molecular characterization of delta-COP and protein interactions within the complex

Copyright © 2011 by The Rockefeller University Press.Coatomer is a cytosolic protein complex that forms the coat of COP I-coated transport vesicles. In our attempt to analyze the physical and functional interactions between its seven subunits (coat proteins, [COPs] alpha-zeta), we engaged in a program to clone and characterize the individual coatomer subunits. We have now cloned, sequenced, and overexpressed bovine alpha-COP, the 135-kD subunit of coatomer as well as delta-COP, the 57-kD subunit and have identified a yeast homolog of delta-COP by cDNA sequence comparison and by NH2-terminal peptide sequencing. delta-COP shows homologies to subunits of the clathrin adaptor complexes AP1 and AP2. We show that in Golgi-enriched membrane fractions, the protein is predominantly found in COP I-coated transport vesicles and in the budding regions of the Golgi membranes. A knock-out of the delta-COP gene in yeast is lethal. Immunoprecipitation, as well as analysis exploiting the two-hybrid system in a complete COP screen, showed physical interactions between alpha- and epsilon-COPs and between beta- and delta-COPs. Moreover, the two-hybrid system indicates interactions between gamma- and zeta-COPs as well as between alpha- and beta' COPs. We propose that these interactions reflect in vivo associations of those subunits and thus play a functional role in the assembly of coatomer and/or serve to maintain the molecular architecture of the complex.This work was supported by The Deutsche Forschungsgemeinschaft (SFB 352), the Human Frontier Science Program, and the Swiss National Science Foundation No. 31-43366.95

The role of infectious disease impact in informing decision-making for animal health management in aquaculture systems in Bangladesh

The aquaculture sector in Bangladesh is an important employer and a significant source of foreign exchange. In addition, it contributes significantly to food security due to the role of fish in peoples’ diets, the most important source of protein and micronutrients. However, infectious diseases represent an important barrier to sector development due to economic losses and vulnerability of smallholders. The aim of this study was to gain an overview of the impact of infectious diseases in the aquaculture sector, and to assess the usefulness and use of impact studies in decision making for animal health management and biosecurity governance in Bangladesh. A review of scientific and grey literature on infectious disease impact in different aquaculture systems was conducted and their methodologies and findings summarised. Subsequently, interviews with 28 stakeholders from the private and public sector were conducted to enquire about decision-making structures in animal health management. The data were analysed using the framework method to allow the development of themes, by using the information, experiences and opinions inductively obtained from interviewees, deductively through the reviewed literature. Results showed a substantial socio-economic impact of infectious diseases. The numerous stakeholders involved in the decision-making process explained that key barriers to effective aquaculture health management were insufficient resources to investigate and tackle infectious aquatic animal diseases, a dearth of legislation and capacity for disease surveillance, a reliance on reactive response, and a lack of impact and evidence-based approaches for prioritising problem-solving, commonly based on anecdotal evidence. Furthermore, communication among the multiple stakeholders involved was reported to be weak. This complex situation requires a multi-level response, which should span from strengthening the knowledge of farmers and professionals in the field to the improvement of surveillance and diagnostic systems. Improved systems along with evidence on disease impact could inform the prioritisation of diseases and resource allocation for disease control in Bangladesh. Further, this evidence needs to be used to advise decisions to have a true value, for which establishing and strengthening communication pathways and processes is critical to make systematic use of the information and improve animal health management. In the light of future threats to Bangladesh such as climate change, increasing population density and demand for animal source foods, it is crucial to strengthen animal health management systems to reduce livelihoods vulnerability, food insecurity and the likelihood of disease emergence

Quantum healing of classical singularities in power-law spacetimes

We study a broad class of spacetimes whose metric coefficients reduce to powers of a radius r in the limit of small r. Among these four-parameter "power-law" metrics we identify those parameters for which the spacetimes have classical singularities as r approaches 0. We show that a large set of such classically singular spacetimes is nevertheless nonsingular quantum mechanically, in that the Hamiltonian operator is essentially self-adjoint, so that the evolution of quantum wave packets lacks the ambiguity associated with scattering off singularities. Using these metrics, the broadest class yet studied to compare classical with quantum singularities, we explore the physical reasons why some that are singular classically are "healed" quantum mechanically, while others are not. We show that most (but not all) of the remaining quantum-mechanically singular spacetimes can be excluded if either the weak energy condition or the dominant energy condition is invoked, and we briefly discuss the effect of this work on the strong cosmic censorship hypothesis.Comment: 14 pages, 1 figure; extensive revision