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A-Team Insight Blogs

S&P’s FIRMS Business Joins Valuations Vendor Community with Structured Asset Portfolios Service

As another example of Lou Ecclestone’s revamp of the Standard & Poor’s offering as part of its recently launched Fixed Income Risk Management Services (FIRMS) business, the vendor has added a new valuations service for structured assets and complex securities. The Valuation Scenario Services for Structured Asset Portfolios pits S&P against the competition in the already rather crowded valuations market.

According to Ecclestone, who was appointed executive managing director of FIRMS at the start of last year, the service is aimed at providing a much clearer picture of the real value of the paper financial institutions are holding in order for them to more accurately analyse their portfolios. “Market uncertainty, a lack of liquidity and an overall crisis sentiment are combining to create a disrupted relationship between market observed pricing and the intrinsic value of structured assets on investors’ balance sheets,” he says.

Accordingly, the service offers a range of analytics that aims to give investors greater context around asset pricing and the detailed relationships between counterparties and obligors. FIRMS indicates it is currently working with an unspecified number of central banks, investors, regulatory and industry bodies to help them value these complex and illiquid securities.

The vendor claims that the analytics provided by the service offer investors a step by step, transparent assessment of their structured portfolios under a range of different assumptions and economic scenarios. This information is then reviewed in a collaborative decision support process with clients to help drive an improved understanding of structured credit portfolio value.

Standard & Poor’s Valuation Scenario Services operates independently from the company’s ratings business and it is supported by the newly formed Market, Credit and Risk Strategies (MCRS) team. MCRS has been created as an independent research group that analyses cross market and cross asset class valuations and relationships. The valuations service is also supported by the Standard & Poor’s Structured Finance Platform and modelling team and the Fixed Income Architects team.

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