LONDON (Reuters) – CCredit ratings agencies are working on boosting coverage of hedge funds in response to a growing need for transparency in the sector, but face analytical problems and, ironically,a lack of transparency in doing so.
Regulators around the world have been making ever louder noises about boosting transparency in the $1.2 trillion (640 billion pounds) hedge fund industry, with credit ratings seen as one way of providing an outside assessment of funds’ standing.
The big three agencies already assign some ratings to hedge funds, although these are mainly to do with operational risk than credit risk or a fund’s performance.
Standard & Poor’s is working on a new set of criteria for rating hedge funds that is set to be published by the end of the year, a senior official at the agency said on Thursday.
“It’s a high-priority sector for us to develop,” said Scott Bugie, a managing director in the financial services group at Standard & Poor’s. “But it’s a tough industry, very challenging analytically.”
