Moody’s Investors Service is considering removing a high, crisis-era default probability from its rating, Financial Times reports. Nearly all collateralized loan obligations (CLOs) may be upgraded.
The ratings agency is planning to remove the 30% default probability it had applied to all transactions in February 2009 and to revise its underlying methodology. The move will lead to a positive ratings impact, averaging one notch for the best-rated tranches and up to three notches for the riskier, or junior, tranches.

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