* New sovereign ratings calendar required by EU rules
* Can review only on published dates, with few exceptions
* Agencies criticised for role in financial and euro zone
* Some fear calendar will focus market speculation
* Some say countries might game system by delaying bad news
By Marc Jones
LONDON, Jan 2 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
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
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
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
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
On the 24th Moody's moves on to both the UK, one of the
fastest-growing industrialised 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
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.