Cor­po­rate sluts!


Finweek English Edition - - MANAGEMENT -

Ire­mem­ber walking along out­side a prom­i­nent Rose­bank ho­tel, try­ing to find my car af­ter a night out. Stand­ing on the street cor­ner were two ladies, dressed to the nines in tight skirts, thigh­high boots and bust-pop­ping blouses. I stopped in my tracks, won­der­ing how to avoid the cringe-wor­thy ex­change that was surely to fol­low. Pros­ti­tutes are def­i­nitely not my thing.

I needn’t have wor­ried, how­ever. The two were em­broiled in a heated ex­change and didn’t even no­tice me. As I walked past, I heard the one say: “You did what?!” The other held up her hand in the first one’s face and looked away, rolling her eyes. “I can’t be­lieve you did that,” the first one con­tin­ued. “You’re such a slut!”

I found my car and drove off, leav­ing the two of them still bick­er­ing on the cor­ner. There were two thoughts dom­i­nat­ing my mind as I drove along. First, what could the sec­ond pros­ti­tute pos­si­bly have done to make the first one so in­cred­u­lous – though in hind­sight, per­haps I don’t want to know? Sec­ond, the whole ar­gu­ment was drip­ping with irony – one whore call­ing an­other whore a “slut”. It was ac­tu­ally quite com­i­cal.

I ob­served the same irony a week or two ago when I read an ar­ti­cle about how one of the largest rat­ings agen­cies down­graded the rat­ing of one of the other rat­ings agen­cies. Moody’s cut the debt rat­ing of Stan­dard & Poor’s par­ent com­pany by two lev­els from A3 to Baa2, mainly as a re­sult of a law­suit filed by the US Jus­tice De­part­ment against the com­pany. This is chutz­pah in the ex­treme, es­pe­cially since I don’t be­lieve that ei­ther of the two com­pa­nies has a right to ex­ist in the first place. Rat­ings agen­cies are the sluts of the cor­po­rate world.


On the face of it, the rat­ings agen­cies ac­tu­ally serve a very use­ful func­tion. Let’s say that a com­pany wants to raise money to fund ex­pan­sion into a new mar­ket. In­stead of rais­ing more money on the stock ex­change, it de­cides to go the debt route. So it is­sues a cor­po­rate bond, promis­ing to pay in­vestors a fixed monthly in­ter­est pay­ment in re­turn for a cap­i­tal sum up­front (which is then re­turned at the end of the loan pe­riod).

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