Standard & Poor's, Moody's Investors Service and Fitch Ratings all announced reforms to their rating methods in early 2008, responding to recent market disruptions attributed to mortgage-backed debt securities.

In February, S&P laid out 27 initiatives to change its rating practices. Among them, S&P established an ombudsman position to oversee potential conflict-of-interest and governance issues. Additionally, the company plans to bring in external auditors periodically to evaluate its compliance and governance processes. Other efforts include new public education programs and intended enhancements to S&P analysts' evaluation processes.

"The ongoing transformation of the financial markets requires us to continue to bring more innovative thinking, greater resources and improved analytics to the ratings process," S&P President Deven Sharma said. "By further enhancing independence, strengthening the ratings process and increasing transparency, the actions we are taking will serve the public interest by building greater confidence in credit ratings and supporting the efficient operation of the global credit markets."

Fitch also proposed a number of changes in February to its rating system for corporate collateralized debt obligations (CDOs). Some of the proposed changes include altering default and recovery rates, as well as benchmarking the company's ratings methodology against updated historical default rates.

In an analysis of the proposed changes, Fitch said that the new ratings systems would likely have a "muted" effect on cash-flow CDOs holding high-yield assets. However, Fitch said "synthetic" CDOs, which are based on underlying portfolios, are more likely to be affected.

Moody's solicited comments on proposals to differentiate its structured finance ratings from its corporate finance ratings. Under one option, Moody's would completely separate its structured finance ratings and create an entirely new ranking system for such products. Another alternative would be to keep structured products on the same rating scale, while modifying the scale to denote when a rating applies to a structured finance instrument. Among the other options, Moody's suggested continuing its current rating system for structured products, but adding further information on other risk factors.

A rendering of ProLogis Kaiser Distribution Park. The building has installed solar panels as one of the company’s green initiatives. ProLogis Looking Green ProLogis (NYSE: PLD) became the latest U.S. REIT to unveil an environment-friendly building initiative for all development projects going forward. The industrial REIT announced in January that all of its development would conform to the standards of the U.S. Green Building Council (USGBC), a building industry nonprofit group that promotes sustainable development. The initiative applies to all projects in the future and those already in the planning stage as of January 1. ProLogis plans to pursue Leadership in Energy and Environmental Design (LEED) certification from the USGBC for its new construction. The REIT industry has embraced the LEED program as the standard for green building principles. In its announcement about the new effort, ProLogis said that all of its North American project managers have received training on LEED standards and sustainability. ProLogis currently has 3.5 million square feet under construction that are subject to the new standards, in addition to plans to initiate 11 million square feet of new building in 2008.