S&P to appeal Australian judge ruling over misleading grading

Standard & Poor's said it would appeal an Australian judge's ruling that the ratings agency misled investors by giving its highest credit grade to securities whose value plunged during the global financial ciris.

Federal Court justice Jayne Jagot said in her ruling released today in Sydney that S&P had been ''misleading and deceptive'' in its rating of two structured debt issues in 2006.

The Australian municipalities that instituted the case were entitled to damages from S&P and two other defendants,  ABN Amro Bank NV and Local Government Financial Services Pty the judge ruled.

Twelve Australian councils claimed losses of over 90 per cent of the $16 million they invested in so-called Rembrandt notes rated AAA by S&P and linked to credit-default swaps on investment grade companies.

The repackaging of debt into securities with top rankings from S&P and other rating companies contributed over $2 trillion in losses and writedowns with the collapse of Lehman Brothers Holdings Inc in 2008 and the global recession that hit the global economy in its wake.

''We reject any suggestion our opinions were inappropriate and we will appeal the Australian ruling, which relates to a specific rating,'' S&P said in a statement.