LONDON Europe's new calendar for sovereign credit ratings, an EU measure to shine a light on the actions of ratings agencies, will in its busy first few weeks thrust the market spotlight on bailed-out Portugal and recently downgraded France.
European Union rules came into force this month requiring Standard and Poor's, Moody's, Fitch and other credit ratings agencies that operate in Europe for the first time to lay out the dates on which they review a country's rating.
They could previously conduct and publish their market-moving reviews at a time of their own choosing and were accused by euro zone officials of exacerbating the region's debt crisis by downgrading the ratings of struggling countries at critical moments.
The rules are part of a raft of increased regulation on the agencies, which also came under fire for underestimating the risks of mortgage-related securities in the run-up to the 2007/08 global financial crisis.
All of the big three firms left it right until the year-end deadline to publish their calendars, resulting in a number of busy schedule periods that could make for volatile markets.
Mid-April looks particularly hectic; DBRS, a smaller Toronto-based firm, decides on the 11th whether or not to downgrade Italy and Spain, and Fitch does the same two weeks later.
If DBRS cuts one or both of them to B-grade territory it would mean their sovereign bonds would automatically be worth 5 percent less when swapped for cheap funding at the European Central Bank.
Before that, January gets the new system off with a bang. Moody's reviews Portugal, which is still working through its EU/IMF bailout, on the 10th. S&P follows suit on the 17th, the same day Moody's looks at Ireland, which emerged from its bailout last month, and Fitch casts the slide rule over the Netherlands.
On the 24th Moody's moves on to both the UK, one of the fastest-growing industrialized nations, and France, which is under threat of another downgrade, before February's headline date of the 14th, when it reviews Italy, the euro zone's second most indebted state relative to GDP.
"The first few months of the year will be quite busy," said Citi analyst Nishay Patel. "In the first quarter, there are eight publication dates for European sovereigns who currently have a negative outlook by either S&P or Moody's."
The new rules are intended to make the ratings process more transparent and reduce the clout of the big three firms, but some policymakers warn they risk creating what one recently called a "downgrade diary" that traders could use to bet against vulnerable states.
Some also wonder whether countries might try to game the new system by delaying bad news until just after the review dates.
The rating firms will only be able to make changes outside the pre-set timetable in extreme cases, for example if a government falls or its finances undergo a significant change, for which the agency must provide a detailed explanation.
Ratings have to be published on a Friday either an hour before or after market hours.
One quirk of the new rules is that if a country in another part of the world is rated by an analyst based in Europe, those ratings are also subject to the new requirements.
For S&P that is roughly half the 127 countries it rates and includes most of Africa and the Middle East, and the story is similar for both Moody's and Fitch.
(Reporting by Marc Jones; Editing by Will Waterman)