Morningstar Has a AAA-Rated Plan

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Morningstar (Nasdaq: MORN  ) announced today that it's getting into the credit rating business.

Morningstar's 100+ equity analysts already cover more than 2,000 companies. Now, in addition to their normal analysis and research, Morningstar analysts will be taking the next step and providing credit ratings. They'll start slowly at first with just 100 companies, eventually growing to 1,000. 

It's not a huge logical leap to see Morningstar going after the big three credit rating agencies -- Moody's (NYSE: MCO  ) , S&P (a division of McGraw-Hill (NYSE: MHP  ) ), and Fitch -- in earnest (e.g. rating mortgage-backed securities, municipal bonds, etc.). The big three have a virtual monopoly on credit ratings in the U.S. because the Securities and Exchange Commission allows their ratings to be used for regulatory compliance purposes. But with all the blame and bad press the credit ratings agencies have been getting, now seems a great time for Morningstar to wedge its foot in the door.

Great move, Morningstar.

Anyone disagree? Let me know in the comments section below.

Moody's and Morningstar are Motley Fool Stock Advisor picks. Moody's is a Motley Fool Inside Value recommendation. The Fool owns shares of Morningstar. Motley Fool Options has recommended selling puts on Moody's. The Fool has a disclosure policy.

Anand Chokkavelu does not own shares of any stock mentioned in this article. He is a big fan of Morningstar's research and business model. You can follow him on Twitter. The Fool has a disclosure policy.


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  • Report this Comment On December 02, 2009, at 1:59 PM, NorseWarrior wrote:

    An excellent bridge across the regulatory moat that the big 3 have established. With Moody's current weakness, it will upset the apple cart enough to force a reaction. That's precisely the kind of disruption that make markets grow. Great move!

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