Is the U.S. ready for another kind of bond ratings agency? Sean Egan, co-founder of 15-year-old Wynnewood, Pennsylvania–based Egan-Jones Ratings Co. sure hopes so. In late December his outfit, which charges investors, not issuers, for its ratings, obtained Nationally Recognized Statistical Rating Organization (NRSRO) status from the U.S. Securities and Exchange Commission. That ought to help the firm, which employs 14 analysts, better compete with other NRSROs, including longtime leaders Standard & Poor’s and Moody’s Investors Service. Egan-Jones says it has more than 400 clients — hedge funds, pension funds and other investors — but NRSRO status, which took 11 years to win, should help it gain more. “If you’re running a mutual fund set up to invest in investment-grade bonds, why would you rely on a ratings agency that is supported by the issuers?” says Egan. “The whole game is wrong.”
