Standard & Poor's is planning to make public its ratings on some privately placed debt issues.
The ratings group was expected to announce this week that it has decided the 144A private placement market is sufficiently liquid and mature to require timely ratings on new issues.
Private placements of debt are sold to sophisticated investors, such as insurance companies and pension funds, with more than $100 million in net assets. The 144A market - in which institutional investors trade unregistered securities - is named for the Securities and Exchange Commission regulation that allowed such activity.
The private placements are issued by a wide range of companies and are sold by commercial and investment banks.
S&P will make public its assessment of underwritten deals that are expected to generate secondary market trading activity and that are placed with more than a handful investors.
"We were taking the most conservative position," said Joanne W. Rose, a senior managing director and general counsel.
When the 144A market was first created in 1990, "it wasn't clear whether it would result in a private or quasi-public market," Ms. Rose said.
Years of trading activity, however, suggest that at least a part of the 144A private placement market has become quasi-public, which makes ratings important to investors, Ms. Rose said.
The policy change merely reflects the realities of the 144A market, and could increase its efficiency.
Moody's Investors Service, S&P's principal rival, has already instituted the practice of making select private placement ratings available to the public.
Experts said S&P's ratings had made it into the market anyway, even prior to disclosure.
"Rather than relying on third-party sources that may or may not be accurate" to disseminate its ratings, S&P decided to make its ratings public, Ms. Rose said.
Making the ratings available creates a "level playing field," Ms. Rose said.
S&P will make public its ratings public on the larger deals that have registration requirements and that are sold in a take-it-or-leave-it fashion - as opposed to the usual negotiated transaction.
While the agency still plans to rate transactions only when asked, it plans to make public any private placement that meets such qualifications.
The traditional private placement has been a negotiated transaction between buyers and sellers, with an investment bank serving as agent and selling the deal on a best-efforts basis. Investors typically don't trade the company's debt.
More recently, private placements have included fully underwritten deals that investors have bought and traded.