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S&P INFORMATION

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S&P's Leadership Actions

Welcome to www.spnewactions.com, a website designed to introduce the public to the broad array of new actions S&P has launched to further strengthen our ratings processes and better serve capital markets worldwide. These measures reflect our commitment to continuous improvement and are designed to strengthen and enhance governance, the quality of our analytics, market transparency and investor education and to serving the public interest by building investor confidence in credit ratings and supporting the efficient operation of credit markets around the world.

We are committed to playing a leadership role in addressing the issues currently facing the credit markets in collaboration with other market participants, regulators and experts. We invite you to review the descriptions of the actions we are taking and hope the information will help you better understand the ratings process and its role in global credit markets.

Please check back often for frequent updates.

Governance

S&P’s steps to further manage potential conflicts of interest, strengthen the ratings process, and better serve the markets

Governance: Ensuring Integrity of the Ratings Process

McGraw-Hill named Ray Groves, former head of Ernst & Young, as the Standard & Poor’s Ombudsman in January of 2009. His position became effective February 16, 2009. Contact information for the Ombudsman is available on Standard & Poor’s Web site.
Standard & Poor’s management continues to meet on a regular basis with the McGraw-Hill Audit Committee and the full Board of Directors to review compliance and governance for S&P Ratings Services. The Audit Committee also has the ability to schedule additional meetings as appropriate.
In addition to maintaining an independent compliance function, Standard & Poor’s has separated the criteria management and development; quality assurance; and policy governance groups from the analytic teams within ratings.
In the new organizational structure introduced in mid-2008, the criteria and quality assurance groups have been centralized and now report into the Chief Credit Officer and Chief Quality Officer, respectively, rather than to the analytic groups within Ratings.
Standard & Poor’s has made a significant investment in its compliance functions. New personnel and resources have been added, including the appointment of David Leibowitz as Chief Compliance Officer in December 2008.
Standard & Poor’s has established an independent Policy Governance Group (PGG) and gave it a mandate to develop and approve all new ratings policies and procedures. This group is also responsible for maintaining policies that are clear, measurable, and uphold our quality standards. PGG membership includes representatives from the legal and compliance teams as well as the Analytical Policy Board.
Standard & Poor’s has established an Enterprise Risk Oversight Committee. It met regularly in 2008 and 2009 and will continue to do so. The committee comprises senior leaders from various parts of Standard & Poor’s, including Standard & Poor’s President, Chief Economist, Executive Vice President of Operations Services and other S&P executives from outside of the ratings business. The group also includes employees with specific areas of market expertise, such as in leveraged loans, structured finance, and financial institutions.
Standard & Poor’s has implemented the policy of conducting “look-back” reviews of analysts’ work whenever one leaves to work for an issuer. The policy took effect in the second half of 2008 and all ratings analysts are subject to it. In addition, Standard & Poor’s will rotate analysts off issuers or specific credits if they have served as the primary analyst for more than five years. We are currently gauging the potential impact of recent EU regulations that include rotation and look-back provisions and will modify our policies as necessary.
Standard & Poor’s has enhanced its global compliance training with a new online training course to reinforce key policies for analysts and others with access to ratings information or who are otherwise part of the ratings process.
As various regulatory changes are occurring around the globe, S&P is taking steps to review them and modify its policies and processes accordingly. In addition, with increased oversight by regulators around the world, S&P intends to re-evaluate whether to engage an external firm to conduct an independent review of its compliance and governance processes. S&P will update the market on its plans when they move forward.
In 2009, S&P convened a “discussion group” with representation from risk managers, academics and former government officials and is planning additional sessions during 2010 as various regulatory changes are occurring around the globe.
Standard & Poor’s has improved access to key ratings policies and Codes of Conduct by adding an icon to analysts’ desktops that directly links to these items.

Analytics

S&P’s steps to further manage potential conflicts of interest, strengthen the ratings process, and better serve the markets

Analytics: Enhancing Quality of Ratings Analysis and Opinions

Standard & Poor’s has developed and implemented several new tools to enhance surveillance in its U.S. Corporate & Governments Ratings group, including a tool that delivers market indicators such as credit default swap, bond, and loan spreads and prices to analysts’ desktop; new tools for searching SEC filings and news; and enhanced default risk models.
Standard & Poor’s has created a separate Model Validation Group and hired Dr. Martin Goldberg to lead the group. The Model Validation Group reports to Standard & Poor’s Chief Credit Officer and conducts independent analysis and validates the models, either developed by Standard & Poor’s or provided by issuers, used in the ratings process.
To enhance analysts’ training, Standard & Poor’s has partnered with New York University Stern School of Business and American College Testing (ACT) for its Credit Analyst Certification Program. The Analyst Certification Program comprises two levels. The first level focuses on knowledge of the capital markets and Standard & Poor’s criteria and methodology for credit analysis across the sectors we rate. The second level focuses on specific asset class analysis relevant to the area in which each analyst works. All analysts employed by Standard & Poor’s Rating Services will be required to pass both levels in order to act as a primary credit analyst and vote in a ratings committee.
In addition, Standard & Poor’s has increased its annual continuing education and training requirement for its ratings analysts by 25%. Standard & Poor’s is also expanding the types of training classes it provides for its analysts.
Standard & Poor’s issued several Requests for Comment (RFCs) from market participants about providing commentary and analysis on non-default risks. The RFCs focused on liquidity, volatility, correlation, and recovery.
Following a review of the responses and additional conversations with market participants, Standard & Poor’s has adopted new criteria that address ratings stability, or the potential ratings volatility of a security rated by Standard & Poor’s. Details of the new criteria can be found on our Web site www.standardandpoors.com.
Standard & Poor’s has determined it that it will not offer an explicit rating or ranking scale on a security’s relative liquidity, i.e., the ease of trading that security. Standard & Poor’s will continue to incorporate liquidity dependencies into its ratings analysis where appropriate and publicly comment on those dependencies in its analysis.
In November 2009, Standard & Poor’s introduced Recovery Analytics for low-rated Residential Mortgage-backed Securities. Recovery Analytics estimate the projected cash flow and losses of RMBS under economic stress scenarios related to each of our rating categories.

Information

S&P’s steps to further manage potential conflicts of interest, strengthen the ratings process, and better serve the markets

Information: Providing Greater Transparency and Insight to Market Participants

In the fourth quarter of 2009, Standard & Poor’s launched a new corporate website. The new site provides easier access to credit ratings and various reports and articles, including criteria, relevant to the ratings process. In addition, the new StandardandPoors.com has enhanced search functionality.
Standard & Poor’s has published “what if” scenario analyses on the majority of the segments of the market we rate in Structured Finance, including residential mortgage-backed securities (RMBS), commercial mortgage-backed securities, credit card receivables, and auto loans, among others.
In November 2008, Standard & Poor’s published enhanced criteria regarding mortgage originator and underwriting reviews. The enhanced criteria explicitly factor our view of the quality of mortgage originators’ underwriting processes and guidelines, as well as their performance, in our ratings analysis of U.S. RMBS.
In November 2008, Standard & Poor’s published criteria incorporating the results of third-party due diligence reviews into our ratings analysis of U.S. RMBS. The criteria address the processes used to perform due diligence as well as certain loan level results from that process.
Standard & Poor’s has also enhanced its criteria with respect to the representations and warranties provided by mortgage loans originators and sellers concerning the mortgage loans backing the U.S. RMBS that it rates. These include representations concerning the accuracy of the information provided to Standard & Poor’s in the ratings process.
Standard & Poor’s has increased the distribution of its ratings’ performance, as well as ratings transitions, via several newsletters the company publishes, as well as audio and visual presentations, available for viewing or download on www.standardandpoors.com.
Standard & Poor’s analysts have been discussing comparability and Standard & Poor’s global ratings scales as two of key points during meetings and speaking engagements with investors and other market participants.
Standard & Poor’s annually publishes its Transition & Default Studies, which provide detailed information about the performance of Standard & Poor’s ratings across sectors. Standard & Poor’s has also published several recent pieces that highlight its actions in the public finance market to maintain comparability of ratings.
Under the European Regulation on Credit Rating Agencies (Regulation (EC) No 1060/2009) in force from December 2009, credit rating agencies regulated within the European Union will be required to add a symbol to ratings on structured finance instruments.
Standard & Poor's Ratings Services will apply for registration under the Regulation. It is our intention that, on or before Sept. 7, 2010, we will give all ratings on structured finance instruments such an additional symbol. The symbol that we will use is "(SF)".
Having carefully considered various options, we believe that operationally it is most practical to have a global application of this rule and accordingly determined that our attribution of a symbol to structured finance instruments will be global.
Standard & Poor’s began publishing Landmark Deal reports in August of 2008 and has published them regularly since then.
Standard & Poor’s code of ethics and disclosures are now available on the regulatory affairs section of www.standardandpoors.com
Standard & Poor’s began, in April of 2009, to publish the names of the providers of rating-dependent liquidity and credit support to asset-backed commercial paper (ABCP) conduits. Standard & Poor’s will withdraw its ABCP ratings for conduit sponsors who do not want Standard & Poor’s to publish this information.
Standard & Poor’s has developed a number of monthly early-warning indicators for a variety of asset classes and will be implementing them over the next three to six months. The indicators cover many structured finance asset classes, including all global synthetic and cash flow CDOs, European RMBS, and European ABS. In addition, we have further enhanced our technology platforms for analyzing sub-prime, Alt-A and Prime RMBS transactions.

Education

S&P’s steps to further manage potential conflicts of interest, strengthen the ratings process, and better serve the markets

Education: More Effectively Educating Marketplace about Credit Ratings and Rated Securities

Standard & Poor’s published a Guide To Credit Ratings Essentials in January of 2009. Standard & Poor’s has been distributing the guide at industry conferences and at speaking engagements since it was published. Additional information and electronic copies of the guide are available at www.AboutCreditRatings.com or www.standardandpoors.com/AboutCreditRatings
In addition to making every ratings action available via its Web site, Standard & Poor’s publishes newsletters recapping its ratings actions and major industry reports called CreditMatters Today and Structured Finance Intelligence. The newsletters are distributed to more than 35,000 market participants.
Standard & Poor’s has begun publishing a monthly electronic newsletter for legislators and regulators, focusing on the intersection of public policy and the credit markets.
In 2008, Standard & Poor’s podcasts, featuring commentary and analysis by Standard & Poor’s credit analysts, were downloaded more than 86,000 times. These podcasts are free and available for download on www.standardandpoors.com, iTunes, and other online outlets.
In order to promote better understanding of the securities we rate, Standard & Poor’s officials met with more than 640 Chief Investment Officers at major financial institutions globally since February 2008.
In addition, Standard & Poor’s officials met with current and past regulators, legislators, and financial ministers from countries that are home to almost every major financial market around the world.
Standard & Poor’s is finalizing the initial members of the advisory council for market education and will publicly announce the members shortly.
Standard & Poor’s has been an active participant in a number of ratings industry initiatives, including Project Restart, sponsored by the American Securitization Forum and an European Central Bank initiative to enhance loan level data transparency. In addition, Standard & Poor’s has maintained an active dialogue with various types of market participants, including regulators, financial institutions, trade groups, and legislators.