A lead lag analysis of banking sector watchlist, outlook and credit rating announcements between Moody’s and S&P.

<p>Credit ratings are used to reduce the information gap between investors and borrowers (Duff and Einig, 2009) and have been a significant area of interest to investors, regulators, and other market participants over the last two decades. Numerous studies have shown that assigned ratings and rating changes have a significant impact on the pricing of risk and the rate of return for fixed income instruments (Livingston <em>et al</em>, 2008). There are seven major international credit rating agencies (CRAs) within the industry, the main two accounting for 80% of the market are Moody’s Investors Service, Standard and Poor’s (S&P) and Fitch accounting for around 15% of the market. </p>