Fitch Ratings Inc. is an American

credit rating agency A credit rating agency (CRA, also called a ratings service) is a company that assigns credit ratings, which rate a debtor's ability to pay back debt by making timely principal and interest payments and the likelihood of default. An agency may ra ...

. It is one of the three

nationally recognized statistical rating organization A nationally recognized statistical rating organization (NRSRO) is a credit rating agency (CRA) approved by the U.S. Securities and Exchange Commission (SEC) to provide information that financial firms must rely on for certain regulatory purpo ...

s (NRSRO) designated by the

U.S. Securities and Exchange Commission The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929. Its primary purpose is to enforce laws against market m ...

and is considered as being one of the " Big Three credit rating agencies", along with

Moody's Moody's Ratings, previously and still legally known as Moody's Investors Service and often referred to as Moody's, is the bond credit rating business of Moody's Corporation, representing the company's traditional line of business and its histo ...

and

Standard & Poor's S&P Global Ratings (previously Standard & Poor's and informally known as S&P) is an American credit rating agency (CRA) and a division of S&P Global that publishes financial research and analysis on stocks, bonds, and commodities. S&P is co ...

History

Fitch Ratings is dual headquartered in

New York New York most commonly refers to: * New York (state), a state in the northeastern United States * New York City, the most populous city in the United States, located in the state of New York New York may also refer to: Places United Kingdom * ...

and

London London is the Capital city, capital and List of urban areas in the United Kingdom, largest city of both England and the United Kingdom, with a population of in . London metropolitan area, Its wider metropolitan area is the largest in Wester ...

. Hearst owns 100 percent of the company following its acquisition of an additional 20 percent for $2.8 billion on April 12, 2018. Hearst had owned 80 percent of the company after increasing its ownership stake by 30 percent on December 12, 2014, in a transaction valued at $1.965 billion. Hearst's previous

equity interest Capital participation (sometimes also called ''equity participation'' or ''equity interest'') is a form of equity sharing not restricted to housing, in which a company, infrastructure, property or business is shared between different parties. Share ...

was 80 percent following expansions on an original acquisition of 20 percent interest in 2006. Hearst had jointly owned Fitch with

FIMALAC FIMALAC (known as Financière Marc de Lacharrière) is a French holding company focusing on credit rating and risk management companies. It manages commercial real estate through North Colonnade Ltd, and private equity funds through its subsidiary ...

SA, which held 20 percent of the company until the 2018 transaction. Fitch Ratings and Fitch Solutions are part of the Fitch Group. The firm was founded by John Knowles Fitch on December 24, 1914, in

New York City New York, often called New York City (NYC), is the most populous city in the United States, located at the southern tip of New York State on one of the world's largest natural harbors. The city comprises five boroughs, each coextensive w ...

as the Fitch Publishing Company. In 1989, the company was acquired by a group including

Robert Van Kampen Robert D. Van Kampen (December 16, 1938 – October 29, 1999) was an American businessman, who served as a member of various organizational boards in the business world and Christian ministry. Van Kampen's business career took him into the invest ...

. In 1997, Fitch was acquired by

and was merged with London-based IBCA Limited, a FIMALAC subsidiary. In 2000, Fitch acquired both Chicago-based

Duff & Phelps Duff may refer to: People * Duff (surname) * Duff (given name) * Duff (nickname) * Karen Duffy, an actress, model, and former MTV VJ once known as "Duff" * Duff Roman, on-air name of Canadian radio personality and executive David Mostoway (b ...

Credit Rating Co. (April) and

Thomson Financial Thomson Financial was an arm of the Thomson Corporation, an information provider. When the Thomson Corporation merged with Reuters to form Thomson Reuters in April 2008, Thomson Financial was merged with the business of Reuters to form the Market ...

BankWatch (December). Fitch Ratings is the third largest

NRSRO A nationally recognized statistical rating organization (NRSRO) is a credit rating agency (CRA) approved by the U.S. Securities and Exchange Commission (SEC) to provide information that financial firms must rely on for certain regulatory purp ...

rating agency, covering a more limited share of the market than S&P and Moody's, though it has grown with acquisitions and frequently positions itself as a "tie-breaker" when the other two agencies have ratings similar, but not equal, in scale. In September 2011, Fitch Group announced the sale of

Algorithmics In mathematics and computer science, an algorithm () is a finite sequence of mathematically rigorous instructions, typically used to solve a class of specific problems or to perform a computation. Algorithms are used as specifications for perf ...

(risk analytics software) to

IBM International Business Machines Corporation (using the trademark IBM), nicknamed Big Blue, is an American Multinational corporation, multinational technology company headquartered in Armonk, New York, and present in over 175 countries. It is ...

for $387 million. In June 2022, Fitch Group acquired GeoQuant, an AI-driven data and technology company.

Operations

Fitch Ratings is a subsidiary of Fitch Group, a holding company wholly owned by

Hearst Communications Hearst Corporation, Hearst Holdings Inc. and Hearst Communications Inc. comprise an American multinational mass media and business information conglomerate owned by the Hearst family and based in Hearst Tower in Midtown Manhattan in New York ...

. Fitch Group also operates Fitch Solutions, a distribution channel for Fitch Ratings products and a provider of credit market data and financial analytics. Fitch Group employs approximately 5,000 people, including over 1,600 analysts. Paul Taylor is president and chief executive officer of Fitch Group. Fitch Ratings is registered as a nationally recognized statistical rating organization (NRSRO). The firm has more than 2,400 employees. Ian Linnell is president of Fitch Ratings.

Criticism

The main

credit rating agencies A credit rating agency (CRA, also called a ratings service) is a company that assigns credit ratings, which rate a debtor's ability to pay back debt by making timely principal and interest payments and the likelihood of default. An agency may r ...

, including Fitch, were accused of misrepresenting the risks associated with mortgage-related securities, which included the

collateralized debt obligation A collateralized debt obligation (CDO) is a type of structured finance, structured asset-backed security (ABS). Originally developed as instruments for the corporate debt markets, after 2002 CDOs became vehicles for refinancing Mortgage-backed se ...

(CDO) market. There were large losses in the CDO market that occurred despite being assigned top ratings by the CRAs. For instance, losses on $340.7 million worth of collateralized debt obligations (CDO) issued by

Credit Suisse Group Credit Suisse Group AG (, ) was a global Investment banking, investment bank and financial services firm founded and based in Switzerland. According to UBS, eventually Credit Suisse was to be fully integrated into UBS. While the integration ...

added up to about $125 million, despite being rated AAA by Fitch. However, differently from the other agencies, Fitch was warning the market on the

constant proportion debt obligation A Constant proportion debt obligation (CPDO) is a type of credit derivative sold to investors looking for exposure to credit risk. A CPDO is normally embedded in a note rated by a credit rating agency. CPDOs employ dynamic leveraging in a similar (b ...

s (CPDO) with an early and pre-crisis report highlighting the dangers of CPDOs in 2007.

References

External links

*
Fitch Solutions

Fitch Learning

{{Authority control Credit rating agencies Financial services companies established in 1914 Financial services companies of the United States Companies based in New York City Financial services companies based in New York City 1914 establishments in New York City

History

Operations

Criticism

See also

References

External links