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Morningstar enters the credit-rating game

December 2, 2009 | 12:15 pm

Fixed-income investors, listen up: Morningstar Inc. is getting into the credit-rating game.

The mutual-fund research firm began issuing credit ratings today on 100 large U.S. companies and will expand to 1,000 companies by next year.

The ratings are free on Morningstar’s website, though the information is bare bones.

The ratings cover overall companies but not individual bonds. Microsoft Corp., for example, merits a sparkling AAA rating while energy company Quicksilver Resources Inc. is a “high default risk.”

Detailed analysis such as research reports and recommendations on individual bonds are available only to institutional customers paying premium prices.

Still, the data should be useful to individuals researching stocks and bonds.

And Morningstar’s entrance could alleviate some of the conflicts of interest that have stained the once-sleepy credit-rating industry.

Critics contend that industry titans such as Standard & Poor’s and Moody’s contributed to the financial crisis by issuing overly rosy ratings on toxic bonds. Rating firms have a financial incentive to churn out uncritical research because they’re paid by the issuers, naysayers contend.

Morningstar will not charge companies for ratings.

“Not unless they want to take a subscription,” joked Catherine Odelbo, Morningstar president of equity research.

-- Walter Hamilton