LONDON Feb 20 New rules for European sovereign credit ratings are set for some early tweaking after Standard and Poor's, Moody's and Fitch left investors baffled about how they time their announcements.
The 'big three' have taken differing approaches to guidelines that mean sovereign rating dates are now laid out in an annual calendar.
Decisions must be announced on a Friday, but S&P has already ventured off-schedule twice, while Moody's has confused bond buyers by not publishing anything on some of its planned dates.
The greater clarity on the dates of reviews has been widely welcomed but in practice the timings of announcements have varied widely.
"It is a bit inconsistent, the way the different agencies are interpreting the new rules," Gerard Moerman, Head of Rates & Money Markets at Aegon, one of Europe's big bond funds, said.
"If something is on the agenda they should at least confirm the rating and publish a few comments explaining why. I'm fine with the agenda, but they should stick to it."
The European Securities and Markets Authority (ESMA), Europe's watchdog in charge of the new rules, said such changes often take a bit of getting used and can be worked on.
ESMA told Reuters it was "monitoring how the new regime is working in practice, and will consider further clarification on practicalities as needed."
As part of that monitoring process it is expected to look at the reasons given by agencies for off-schedule rating changes. It could also peer at why S&P might publish as early as 5 in the morning in Europe and Moody's just before midnight, or not at all.
It has the power to raid and fine agencies or even take away rating licenses if it feels they have deliberately broken the rules.
One of the easiest options to bring them into line, however, is with 'question and answer' documents that give a tighter steer on how the rules should work in practice.
ON THE BALL
ESMA is due to publish an annual credit rating supervision report on Friday although it is not expected to include any fresh guidance on the calendar issues.
Alan Reid, managing director for Europe at number four rating agency DBRS, was critical of the lack of communication from the supervisor in the run up to January's introduction of the new rules.
His firm was the first to set out its rating dates in mid-December but he said he heard almost nothing beforehand to say what was expected. "In the end we just decided to publish our dates," he added.
While there has also been confusion that Moody's has opted to schedule three reviews for each country whereas others have stuck to the required two, investors and ESMA are keen for agencies not to be constrained by the new schedules.
S&P has gone off plan for both Ukraine and Turkey so far as growing political turmoil threatens to undermine their economies.
"The criticism the industry had was that during the euro crisis the rating agencies were way behind in, for instance, downgrading some periphery countries," said Aegon's Moerman. "We want them to be on the ball."