The ratings methodology for corporate credit risk is, however, fundamentally different from that used for structured credit and yet the ratings that resulted were placed on the same scale, implying similar potential losses. Ratings agencies in their methodologies also assumed adequate liquidity in the trading of structured credit securities – an assumption that did not hold when this market unravelled.
Unfortunately, investors placed excessive trust in rating agencies' approach to structured credit as the new securities had little in common with corporate bonds.