notching

Definition

A practice used by rating agencies whereby they automatically reduce structured financial collateral ratings made by another agency or agencies, without having assessed and rated themselves such instruments. Notching is mainly applied by rating agencies when they need to rate investment vehicles such as collateralized debt obligations (CDOs) that contain structured finance collaterals rated by a different rating agency. The practice has detractors who suggest it's a way to undermine competition.

Use notching in a sentence

You should always try to be notching upwards so that you soon will be on top and the most desired.

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They were notching a spot on top of the standings and everyone was proud of what they were now doing.

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When you are trying to move up the ladder you need to just keep on notching away until you reach the top.

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