Add to balance / Manage account | User: | Log out |
Prospect News home > News index > List of issuers G > Headlines for General 2005 > News item |
Merrill Lynch discards 'marketweight' recommendations for credit and adopts new 'action-oriented' rating scale
By E. Janene Geiss
Philadelphia, Nov. 21 - Merrill Lynch announced Monday a new "action-oriented" rating scale for U.S. Credit Research.
In response to client feedback, Merrill Lynch said it removed the "marketweight" recommendation and is adopting what it believes will be a more relevant and simple scale that quantifies each recommendation in relation to investors' investment guidelines.
"We wanted to introduce a simple ratings system to reflect the needs of hedge funds, banks and CDO managers as well as index-benchmarked funds," Marc Pinto, head of Americas credit research, said in the release. "It's a response to the key questions institutional investors want answers on - should I trade today at current spreads? And what is driving returns - price or yield?"
The new scale applies the same formula to underweight recommendations as it does to overweight calls, reflecting institutional investors' ability to go short or buy protection on a credit, according to a company news release.
Discarding marketweight, which was established 10 years ago, means that every recommendation will be assigned a direction, either positive or negative, reflecting the view that a marketweight recommendation is of limited value to clients, officials said.
Adopting a numerical scale, Overweight-100% to Underweight-100%, enables Merrill Lynch to offer more precise recommendations, officials said. Intermediate points are at 30% and 70%.
Merrill Lynch also said the new system features a three-month time scale instead of a 12-month view. The shorter time frame allows for incremental adjustments and makes the scale more relevant.
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.