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
"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
It has the power to raid and fine agencies or even take away
rating licenses if it feels they have deliberately broken the
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
"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."