By Marius Zaharia
LONDON Jan 13 New rules designed to cast light
on the workings of credit agencies in Europe caused confusion on
financial markets on Monday when Moody's Investor Services kept
silent on whether it had taken action on Portugal.
Many traders had expected a decision from the agency on
Portugal on Friday under regulations that came into force this
year, and which the European Union said were intended to make
ratings actions more transparent.
Moody's said on Monday in response to questions that it was
not obliged to release a statement if it took no rating action
on a sovereign issuer.
The new EU rules require Moody's and other credit agencies
that operate in Europe, notably Standard and Poor's and Fitch,
to lay out the dates on which they review a country's rating.
The calendar listed Jan. 10 as the date on which Moody's
would review Portugal. After the bailed-out euro zone country
sold 3.25 billion euros of bonds the previous day, the review
was among the week's most anticipated events. Traders said some
investors had bought Portuguese bonds in expectation of a
positive rating decision.
However, by Monday morning there had been no announcement.
In the first hours of trading, it was not clear whether Moody's
had done anything or not, traders said.
Moody's later said in an email to Reuters that no statement
meant no action had been taken and Portugal's Ba3 rating would
next be reviewed on May 9.
"We are not obliged to release anything, to either change
the rating or the outlook or affirm the rating on those days,"
Moody's said. "We are constantly monitoring the situation and if
a ratings action is to take place then it would be published on
those dates but we are not obliged to release anything."
On Friday, in line with the calendar, S&P affirmed Germany's
triple-A ratings with a stable outlook, communicating a decision
similar to that taken by Moody's on Portugal.
On the same day Fitch also affirmed the ratings of the
European Financial Stability Facility - the euro zone's bailout
fund - in line with its published calendar.
Fitch's and S&P's actions reinforced expectations Moody's
would do the same.
"Our understanding was that ratings agencies would announce
something," said Rainer Guntermann, a strategist at Commerzbank
in Frankfurt. "I guess it's a new regulation and we all have to
get familiar with the process."
An S&P review of Portugal, a Moody's review of Ireland and a
Fitch review on the Netherlands, all scheduled for this coming
Friday were still getting the market "excited," he said.
"Netherlands has a negative outlook and we expect it to be
confirmed, Portugal is on credit watch negative and that
actually does require some action and there could be a chance of
an upgrade. On Ireland, it is just a matter of time before
rating agencies start lifting its ratings," Guntermann said.
Richard McGuire, a senior interest rate strategist at
Rabobank in London, said Moody's decision, although surprising,
would not pose any problems to investors from now on as any
statement would, in any case, be delivered after the market
He said, however, that this could have been a way to protest
against EU efforts to have more control over the actions of
rating agencies. Some euro zone politicians have blamed those
firms for deepening the region's debt crisis with downgrades
after they had been perceived as having failed to predict the
global financial crisis in the first place.
"If you're a conspiracy theorist it almost seems to be like
a silent protest," McGuire said.
Portuguese 10-year yields fell 2 basis points
to 5.38 percent on Monday, with analysts saying markets
continued to expect positive reviews from rating agencies in the