The big rating agencies are no longer very useful to investment companies such as the world's biggest bond fund manager PIMCO, which can be quicker to anticipate shifts in credit quality of debt, the company said on Wednesday.

The credit rating agencies no longer serve a valid purpose for investment companies free of regulatory mandates, wrote Pacific Investment Management Co.'s managing director Bill Gross in a May Investment Outlook on the company's Web site.

The big three rating agencies can be timid and slow to downgrade sovereigns, Gross added, citing Standard & Poor's recent one-notch downgrade of Spain as an example.

On April 28, S&P cut Spain's rating one notch on the economic view.

S&P just this past week downgraded Spain one notch to AA from AA+, cautioning that they could face another downgrade if they weren't careful...And believe it or not, Moody's and Fitch still have them as AAAs, Gross wrote.

Spain has 20 percent unemployment and a recent current account deficit of 10 percent, Gross said, adding that in the markets its government bonds are already trading as if they were rated at Baa levels; in the lower echelons of investment grade.

Their warnings were more than tardy when it came to the Enrons and the Worldcoms of ten years past, and most recently their blind faith in sovereign solvency has led to egregious excess in Greece and their southern neighbors, Gross wrote.

Gross manages the PIMCO Total Return Fund, the world's biggest bond fund with assets under management of some $220 billion.

(Reporting by John Parry; Editing by Theodore d'Afflisio)