Dominion Wins Status as Credit Rating Firm

Dominion Bond Rating Service won recognition from the Securities and Exchange Commission on Monday as a credit rating company, becoming the first new competitor to Moody’s Investors Service, Standard & Poor’s and Fitch Inc. in more than a decade.

Toronto-based Dominion, which has 41 credit analysts, compared with about 1,000 at S&P;, was designated a “nationally recognized statistical rating organization,” or NRSRO.

Previously, Moody’s, S&P; and Fitch were the only designated NRSROs.

“We’ve been in discussion with the SEC for almost three years,” said Gregory Root, Dominion’s executive vice president. “We’re glad they finally did it.”

Smaller rating companies have complained that the market for credit ratings was monopolized by Moody’s, S&P; and Fitch because the SEC did not give new firms the official designation.The designation is important for new firms to win business and market credibility because many U.S. fund managers are required to use NRSRO rankings for certain investment decisions.

Root said the designation was the first since Thomson Financial BankWatch was recognized in 1991. That firm was acquired by Fitch in 2000.

Other firms vying for NRSRO status include Lace Financial Corp., Egan-Jones Ratings Co., Japan’s Rating & Investment Information Inc. and A.M. Best Co.

The changes in the market for credit ratings follow the failure of the major rating companies to warn investors about Enron Corp. and other accounting debacles.