By Lionel Laurent and Sinead Cruise
PARIS/LONDON, Dec 15 (Reuters) - In a world where the United States no longer has a AAA and big economies like France and Germany risk losing theirs, investors are increasingly relying as much on their own judgement of top-bracket creditworthiness as on the opinions of ratings agencies.
While two of the largest agencies, Moody's and Standard & Poor's, have been criticised by governments and banks for recent downgrades and threats of ratings cuts, investors say loss of the cherished AAA no longer means an instant "sell".
Critics fear the credit ratings industry is at risk of making rash calls as it fights to restore its credibility after grave mistakes in evaluating billions of dollars of subprime mortgage debt in the run-up to the 2008 financial crisis.
Once the first port of call for funds assembling new portfolios, managers are increasingly sidelining agencies in favour of their own research and are consulting clients to decide if they remain comfortable holding an investment, whether it comes with the top rating or not.
"More and more we are having conversations with clients, as opposed to selling something instantly that falls below that criteria," said Jennifer Gillespie, head of money market funds at Legal & General Investment Management, which runs around 15 around billion pounds ($23.4 billion) of assets in cash and liquidity strategies.
"You cannot be so black and white because the average credit rating of money-market instruments is not AA or AA-plus, it is getting closer to A," she said.
(Read on...)
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