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.

AC electric trapping of neutral atoms

We study the dynamic behavior of ultracold neutral atoms in a macroscopic ac electric trap. Confinement in such a trap is achieved by switching between two saddle-point configurations of the electric field. The gradual formation of a stably trapped cloud is observed and the trap performance is studied versus the switching frequency and the symmetry of the switching cycle. Additionally, the electric field in the trap is mapped out by imaging the atom cloud while the fields are still on. Finally, the phase-space acceptance of the trap is probed by introducing a modified switching cycle. The experimental results are reproduced using full three-dimensional trajectory calculations.Comment: 10 pages, 13 figures, updated version, added journal referenc

3D System Integration for high density Interconnects

3D-Integration is a promising technology towards higher interconnect densities and shorter wiring lengths between multiple chip stacks, thus achieving a very high performance level combined with low power consumption. This technology also offers the possibility to build up systems with high complexity by combining devices of different technologies. The fundamental processing steps will be described, as well as appropriate handling concepts and first electrical results of realized 3D-integrated stacks

Covariant boost and structure functions of baryons in Gross-Neveu models

Baryons in the large N limit of two-dimensional Gross-Neveu models are reconsidered. The time-dependent Dirac-Hartree-Fock approach is used to boost a baryon to any inertial frame and shown to yield the covariant energy-momentum relation. Momentum distributions are computed exactly in arbitrary frames and used to interpolate between the rest frame and the infinite momentum frame, where they are related to structure functions. Effects from the Dirac sea depend sensitively on the occupation fraction of the valence level and the bare fermion mass and do not vanish at infinite momentum. In the case of the kink baryon, they even lead to divergent quark and antiquark structure functions at x=0.Comment: 13 pages, 12 figures; v2: minor correction

Trapping of Rb atoms by ac electric fields

We demonstrate trapping of an ultracold gas of neutral atoms in a macroscopic ac electric trap. Three-dimensional confinement is obtained by switching between two saddle-point configurations of the electric field. Stable trapping is observed in a narrow range of switching frequencies around 60 Hz. The dynamic confinement of the atoms is directly visualized at different phases of the ac switching cycle. We observe about 10^5 Rb atoms in the 1 mm^3 large and several microkelvins deep trap with a lifetime of approximately 5 s.Comment: 4 pages, 4 figures; updated version, added journal referenc

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

Impact of guided bone regeneration and defect dimension on wound healing at chemically modified hydrophilic titanium implant surfaces: an experimental study in dogs

OBJECTIVES: The aim of the present study was to evaluate the impact of guided bone regeneration and defect dimension on wound healing at chemically modified titanium implant surfaces (modSLA). MATERIALS AND METHODS: ModSLA implants were placed at chronic-type lateral ridge defects of different heights (H1-H4: 2, 4, 6 and 8 mm) and randomly allocated to either (a) GBR (polyethylene glycol membrane + biphasic calcium phosphate) or (b) untreated control. At 2 and 8 weeks (n=6 dogs each), dissected blocks were processed for histomorphometrical analysis [e.g., percentage linear fill (PLF), regenerated area (RA)]. RESULTS: At 8 weeks, both groups revealed comparable mean PLF (%) [Control: H1 (26.1 +/- 5.8)-H4 (60.4 +/- 11.8); GBR: H1 (8.3 +/- 5.3)-H4 (50.7 +/- 23.1)] and RA (mm(2)) [Control: H1 (2.5 +/- 0.4)-H4 (7.4 +/- 4.1); GBR: H1 (1.8 +/- 1.0)-H4 (10.8 +/- 5.9)] values. A significant difference was observed for the mean PLF values at H1 defects. CONCLUSION: It was concluded that (i) modSLA titanium implants supported bone regeneration and osseointegration at H1-H4 defects and (ii) the present GBR procedure did not seem to improve the outcome of vertical bone regeneration, but tended to increase the mean RA values

Rational Moral Ignorance

Philosophy and Phenomenological Research, EarlyView

Oceanographic processes influencing seasonal and interannual variability in cod spawning habitat in the eastern Baltic Sea

The volume of water with suitable oxygen and salinity conditions for survival and development of cod/eggs in the eastern Baltie Sea varies significantly within and among years. It has recently been shown that this volume of water (nreproduetive volumen), in addition to spawning stock biomass, is a major factor determining recruitment success in this eod population. However, it is unclear which oceanographie mechanisms are responsible for variability in reproductive volume, and how these processes interaet on a seasonal and interannual basis. In this study, we use time series observations to identify inter-relationships between hydrographie and biological processes (e. g., inflows of North Sea water, winter mixing processes, production and decomposition of organic matter) influencing reproductive volumes from 1952-1992. A frequent pattern of seasonal variability in 4 eastern Baltic spawning areas includes a spring maximum which decreases during the summer, followed by an inerease during the fall-winter months. However, this general pattern is violated in many years, and the magnitude of the seasonality is more pronounced, in some spawning areas than others. \Ve have begun to analyse these patterns and interpret them in the context of other fluctuating components of the eastern Baltic pelagic ecosystem. Preliminary results show that reproductive volumes deerease by an average of 9 - 39% between May and August, and that the decrease in the spawning area most important to long-term recruitment (Bornholm Basin) is temperature-dependen1. The seasonal decline in the Bomholm Basin also tends to be larger and more variable after 1964 than in the previous 12-year periode These patterns of reproductive volume variability may be important to eod reproduetive success beeause of a long and variable spawning period

A new study of 25^{25}Mg(α\alpha,n)28^{28}Si angular distributions at EαE_\alpha = 3 - 5 MeV

The observation of $^{26}$Al gives us the proof of active nucleosynthesis in the Milky Way. However the identification of the main producers of $^{26}$Al is still a matter of debate. Many sites have been proposed, but our poor knowledge of the nuclear processes involved introduces high uncertainties. In particular, the limited accuracy on the $^{25}$Mg($\alpha$,n)$^{28}$Si reaction cross section has been identified as the main source of nuclear uncertainty in the production of $^{26}$Al in C/Ne explosive burning in massive stars, which has been suggested to be the main source of $^{26}$Al in the Galaxy. We studied this reaction through neutron spectroscopy at the CN Van de Graaff accelerator of the Legnaro National Laboratories. Thanks to this technique we are able to discriminate the ($\alpha$,n) events from possible contamination arising from parasitic reactions. In particular, we measured the neutron angular distributions at 5 different beam energies (between 3 and 5 MeV) in the \ang{17.5}-\ang{106} laboratory system angular range. The presented results disagree with the assumptions introduced in the analysis of a previous experiment.Comment: 9 pages, 9 figures - accepted by EPJ