S&P reveals error in ratings model for CPDO

06/13/2008 | Bloomberg

Standard & Poor's found one error in a test model rating constant-proportion debt obligations, but the mistake had no effect on its ratings and was fixed in October, the company said. S&P and Moody's Investors Service awarded top ratings to the CPDOs, which borrowed money to bet on credit-default swaps. Some of the swaps have since collapsed. Moody's said three weeks ago that a computer glitch caused it to misgrade similar debt. That revelation prompted the SEC to look for other errors.

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