Moody’s correction

Moody’s issued a correction today.[1] It had previously tagged as ‘credit negative’ for energy companies, the decision by ICE to move many of its cleared energy OTC swap contracts over to its futures exchange platform. Now Moody’s recognizes that as ‘credit neutral.’ Platt’s coverage is here.

An earlier post of mine was occasioned by Moody’s original report, and explained where it went wrong. I flagged two issues. The first had to do with getting the facts wrong about ICE’s actions. ICE itself notified Moody’s about that error, setting in motion the correction. The second had to do with getting the balance sheet and capital implications wrong. That’s a more fundamental mistake, and not one that is likely to occasion such a quick ‘correction.’ We need to give that one time.

[1]  CORRECTION: Intercontinental Exchange’s Energy Products Transition Is Credit Neutral for Power Producers, Report Number: 144793, August 13, 2012, available by purchase.

One Trackback

  1. […] ICE’s move exposed the duplicity in the argument made by these champions. All of ICE’s cleared energy swaps were already standardized in the same way that a futures product needs to be; that is why they could be readily repackaged as futures. Important market players, however, misunderstood this action because they had been taken in by the duplicity in the champion’s argument–see here and here. […]

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