Our fridge is an A, our TV is unrated, but it has some smart energy-saving features, and our washing machine is A+.
Most recently, after strident objections by banks, there was the shifting of the "w-factor" (the possibly unquantifiable residual risk in a credit derivative) from one supervisory category to another, and also the setting of arbitrary minimum risk weights for unrated securitised assets.
Fiat's bonds are part of about €14 billion of Italian corporate bonds that will mature this year and some €12 billion next year, many of these unrated (see chart).Higher costs on their new debt is the price that corporate Italy will have to pay, says Carlo Pinardi at Bocconi university, for the breakdown of trust.
There were oddities, such as that unrated borrowers would get more favourable treatment than lowly rated ones.
But worse than Parmalat was the sale of many thousands of bonds issued by unrated Italian companies and offered to Italian mutual funds with minimal due diligence.
So big banks will become even less willing to hold unrated securities or non-performing loans, even loans to long-standing corporate clients.
Managers of these pools of assets have played similar games between rated and unrated slices.
Many big investors, such as CalPERS, an enormous public pension fund, do not allow those managing its money to invest in any unrated securities.Scrapping legal mandates to have securities rated has also proved difficult.
Although the issue was unrated, it was heavily oversubscribed.Certainly, the property market is still suffering.
Regulations that still make it virtually impossible to sell unrated bonds in America are also a boon.All this would have seemed improbable only a couple of years ago, when talk abounded of reforming ratings agencies and diminishing their role.
Highly rated companies attract a 1.6% capital charge and lowly rated ones a 12% charge higher, oddly, than unrated companies.
