Fitch Ratings today announced the launch of Derivative Fitch, the first rating agency devoted to the credit derivatives market.

In forming Derivative Fitch, the company will consolidate over 100 professionals from its global Collateralized Debt Obligation and Structured Credit ratings groups and related complimentary products, analytics and modeling groups to exclusively focus on this market. The central goal of Derivative Fitch’s ratings, products and services is to offer improved perspective for investors.

The firm said that with the credit derivatives market now approaching US$33 trillion in notional value outstanding, the market has become a dynamic element of the global financial economy. “Unlike the traditional bond market, the structural complexity of the credit derivatives market is quite different as these instruments and securities are affected not only by risk associated with underlying assets but also heightened sensitivities to factors like credit stability and market risk,” it said. “While hedge funds have been active participants in this market, traditional institutional investors, including pension funds, banks, insurance companies and fund managers, are increasing their participation in this market.”

“Moreover, while the role, use and performance of credit ratings are well defined in the traditional bond markets, credit derivatives investors and members of the global regulatory community have raised questions about whether traditional ratings alone completely address the risks inherent in the credit derivatives market,” it added.

According to Fitch Ratings CEO, Stephen Joynt, “credit rating agencies have long played a vital role in helping give investors an informed and valuable third party perspective on credit risk. We’ve been very successful in the bond markets and today we continue our task of delivering prospective third party ratings, research and evaluation services focused on addressing the specific and expanding needs of the derivatives market.”