Only a year after rating its first commercial mortgage-backed securities transaction, () is number three in the CMBS ratings market, outpacing other rivals including ratings giant Standard & Poor's.
Kroll ranked third in U.S. CMBS ratings after issuing nearly half of the CMBS ratings launched in the first six months of 2012, according to new data from Commercial Mortgage Alert.
Moody's Investors Service (MCO) and Fitch ranked higher than Kroll in U.S. CMBS and U.S. conduit transactions. Moody's did so with 21 U.S. CMBS deals, while Fitch recorded 18 in the first half of 2012.
The CMA alert says Kroll rated 10 U.S. CMBS deals valued at $8.8 billion between January and June, with more ratings on issuance than DBRS and Morningstar.
That also is up from Kroll's market share of 2.4%, or rating $410 million in CMBS issuance, in 2011. Of course, 2011 figures only include half of the year since the firm did not launch its first CMBS issuance until last July.
Commercial Mortgage points out that S&P, once a pre-crash leader in the CMBS rating market, had nothing to do with CMBS conduit deals in the first half and only captured 4% of the nation's overall CMBS issuance..
James Nadler, president of Kroll, attributes the agency's rapid ascent in the CMBS ratings space to investor demand for transparency and the firm's ability to provide detailed data in the wake of the RMBS market crash.
"Since the financial crisis, the relationship between investors and rating agencies has gone through a subtle change," said Nadler. "Investors still need to know the rating, but they also need more detailed and timely information, so they can come to their own conclusions. If you look at our reports, we fulfill that need."
As a ratings house, Kroll continues to make rapid advancement, rating three of the five public RMBS transactions from this year, along with its first subprime auto asset-backed transaction. In addition, the firm just rated its first state and city deal, which involves Connecticut and the city of Waterbury, Nadler said.
As Kroll's president, Nadler is well aware of the firm gaining traction in CMBS, but insists his agency is focused on the investor, not the rankings.
"I think that the incumbent rating agencies, unfortunately, have continued post-crisis to act as if it is business as usual," Nadler said. "Investors who were very disillusioned by what happened during the subprime crisis wanted to see a rating agency that understands the importance and value of due diligence and transparency."
Nadler said if you look back, ratings data used to be somewhat opaque, and the new landscape is requiring ratings firms to focus on the clarity of the overall product.