Because governments can have lousy credit, too, Fitch Ratings issues ratings for some 17,000 banks, financial institutions, insurance companies, corporations, and governments. It's one of the top three credit rating agencies in the world (alongside Moody's and Standard & Poor's). Maintaining dual headquarters in New York and London and about 50 offices worldwide, Fitch Ratings engages in the politically charged business of rating the debt of nations. It covers companies and governments in more than 90 nations. French holding company Fimalac owns 60% of Fitch Ratings; The Hearst Corporation owns the rest. Financial statistician John Knowles Fitch founded the company in 1913.
The venerable rating company scores companies and organizations using a scale, ranging from "AAA" to "D." The system (with "AAA" being the best and "D" signaling default) was introduced in 1924. The company gathers and analyzes a variety of financial, industry, market, and economic information to assess creditworthiness. Customers then use that information to make decisions about investment options.
As part of its research services products suite, Fitch Ratings offers a Peer Analysis Tool via subscription that's driven by its vast collection of credit data. The tool is marketed in a variety of packages specific to geography and sector. It comprises cross-border and peer analyses of more than 19,400 private and public banks, 1,600 corporate entities, and 100 sovereigns.
Rating companies took criticism for being to slow to warn about risks in the market, and their independence has been questioned as a result of the collapse of the subprime mortgage market. To this end, the US Securities and Exchange Commission has investigated credit-rating companies and found that the firms violated procedures and had conflicts of interest as they gave top rankings to mortgage bonds. The commission adopted a round of regulations designed to provide more transparency and curb conflicts of interest. In Europe, new rules have replaced voluntary self-regulation codes.
Fitch responded by establishing Fitch Solutions to provide non-rating products and services. Other divisions of Fitch Ratings include Fitch Training, a continuing education arm for credit analysts and Fitch Research, an online subscription service. Fitch provides risk management software through Algorithmics, which it acquired in 2005.
Fimalac sold a 20% stake in Fitch Ratings to The Hearst Corporation in 2006. It sold another 20% to Hearst in 2009. – less