Fitch Launches Derivatives Rating Agency

Fitch Ratings has announced the launch of Derivative Fitch, the first specialty rating agency designed to provide ratings, research, and analytics that address the unique risks of the credit derivatives market.The structural complexity of the derivatives market is different from that of the traditional bond market, as derivatives "are affected not only by risk associated with underlying assets but also heightened sensitivities to factors like credit stability and market risk," Fitch said. Institutional investors such as pension funds, banks, insurance companies, and fund managers are increasing their participation in the market, the rating agency said. In forming Derivative Fitch, the company said it will consolidate over 100 professionals from its global CDO (collateralized debt obligation) and Structured Credit ratings groups. Besides ratings, Derivative Fitch will offer products and services such as Vector 3.0, a benchmark model for assigning ratings to derivatives; Risk Analytics Platform for Credit Derivatives, a market risk assessment service for synthetic CDOs; Valuspread, a derivatives pricing service; and FitchCDx, an Internet-based research platform. The agency can be found online at http://www.derivativefitch.com.