Bond rating agencies are superfluous when it comes to liquid bonds such as US Treasuries. The only reason their ratings have any impact right now is because of outdated SEC rules related to Nationally Recognized Statistical Rating Organizations.
http://www.sec.gov/answers/nrsro.htm
The market itself is a better judge of future value than any more-or-less arbitrary rating by S&P or one of its competitors.
The bond raters do still add some value by evaluating new issues or thinly traded securities. In those cases the markets don't give us useful information.
The bond raters do still add some value by evaluating new issues or thinly traded securities. In those cases the markets don't give us useful information.