JDA – Just Don't Ask!

Those of you who read my blog of the 28 February (‘Codswallop‘) will be aware of Moodys’ ongoing review of the banking sector known as the JDA – Joint Default Analysis. In this review Moodys has been upgrading banks, often dramatically, based on an expectation of state support. As my previous blog pointed out the major takeaway from the process so far was largely confusion and uncertainty. Many in the market (myself included) failed to understand how certain Icelandic banks for example could now justify a rating of Aaa (Moodys’ highest and in line with the UK government!)

However, it now seems that Moodys has been listening to the wave of criticism and has announced that they are to review the recent review. Given that Moodys’ analysts cannot yet comment on how the methodology will be modified, it is difficult to have an opinion on if the upcoming modifications will clarify the situation. Confusion seems set to remain – and as a result the cost of borrowing for these issuers is in a constant state of flux.


The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.

Stefan Isaacs

Job Title: Deputy CIO Public Fixed Income

Specialist Subjects: Bonds

Likes: Football, travel and the prospect of retirement

Heroes: Sir David Attenborough, Bill Shankly and Theodor Herzl

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