Moody's shifts debt analysts as banks complain: WSJ

(Reuters) - Moody's Corp's MCO.N credit rating unit Moody's Investors Service switched analysts from covering deals of particular investment banks after the banks requested changes, the Wall Street Journal said on Friday, citing people familiar with the matter.

An analyst in a group that rated collateralized debt obligations was moved off an investment bank’s deals after bankers requested an analyst who raised fewer questions about their deals, the newspaper said.

Moody’s also moved another investment banking official to its surveillance unit, which monitors the performance of deals already rated, after an official agreed with an investment banker’s opinion that the analyst was too fussy, the newspaper added.

Moody’s did not immediately return a call seeking comment.

According to the newspaper, Moody's and Fimalac SA's LBCP.PA Fitch Ratings acknowledge they have switched analysts who rate bonds after issuers or bankers asked that they do so.

Standard & Poor's, a unit of McGraw-Hill Cos MHP.N, also made sporadic analyst changes following complaints from bond issuers, the newspaper said, citing a person familiar with the situation. S&P recently began rotating some analysts.

S&P could not be immediately reached for comment.

Moody’s, S&P and Fitch are paid by issuers for the securities they rate, and critics regularly question the conflict of interest they say this arrangement poses for the rating agencies.

Earlier this decade, major U.S. investment banks separated their research and investment banking operations, under pressure from regulators. The separation was designed to ensure that analysts would not be pressured to view companies more favorably so that their employers could win investment banking business.

Shares of Moody’s have fallen 23 percent in the last two days, closing at $34.51 on Thursday on the New York Stock Exchange.

The decline followed a report that a computer error led Moody’s to wrongly assign “triple-A” ratings to complex European debt products called constant proportion debt obligations, but that it might have changed how it assessed those securities to avoid having to downgrade them.

U.S. investor Warren Buffett, whose Berkshire Hathaway Inc insurance and investment company BRKa.NBRKb.N holds close to a 20 percent stake in Moody's, said on Thursday that anyone found responsible for wrongdoing should leave Moody's.