December 19, 2013 / 5:21 PM / 6 years ago

UPDATE 1-First crunch date in Europe's ratings calendar is April 11

(Adds, background detail)

By Marc Jones

LONDON, Dec 19 (Reuters) - Europe’s controversial new credit ratings calendar got its first crunch date on Thursday, when rating agency DBRS said it would decide on April 11 whether to downgrade Spain or Italy.

The date is a key one because if DBRS does pull the trigger, the European Central Bank will impose a 5 percent penalty on Italian and Spanish bonds offered as collateral by banks in exchange for its cheap funding.

Toronto-based DBRS currently rates both countries - and Ireland - at A (low) with a negative outlook, and is the only one of the four rating agencies used by the ECB to still place any of them in the A category that avoids the extra charge.

Under new European rules governing rating agencies, all firms in the region must lay out the dates of their sovereign reviews - when downgrades, upgrades or outlook changes usually happen - by the end of this month.

The changes are intended to make the secretive ratings process more transparent and reduce the clout of big firms like Standard & Poor’s, Moody’s and <Fitch LBCP.PA>.

But behind the scenes, some policymakers warn the schedule risks creating what one earlier this year called a “downgrade diary” that speculative traders could use to target vulnerable states by betting against them in financial markets. )

S&P, Moody’s and Fitch have all refused to say when they will publish their review dates and look to be leaving it until very the last minute before the year-end deadline.

Agencies will be able to change their ratings outside the pre-set timetable but only in extreme cases, for example if a government falls or makes a sudden huge change to its finances.

Rating watchers wonder whether some will try to ‘game’ the new system by leaving the announcement of bad news until just after reviews, but for traders the limited room for manoeuvre means they can position fairly confidently for key rating dates.

There should be plenty. Even if just the big three agencies are included, 28 European Union sovereigns being rated twice a year still adds up to 168 potential bouts of market stress.

And it doesn’t stop there. One quirks of the new rules is that if a country in another part of the world is rated by an analyst based in Europe, it too will be 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.

List of DBRS review dates Norway 31-Jan United Kingdom 14-Feb Denmark 28-Feb European Financial Stability Facility 28-Feb Belgium 21-Mar-14 Ireland 28-Mar-14 Italy 11-Apr-14 Spain 11-Apr-14 Germany 11-Apr-14 Netherlands 25-Apr Finland 16-May Portugal 23-May France 30-May Austria 13-Jun Sweden 13-Jun Cyprus 27-Jun Norway 4-Jul Greece 11-Jul United Kingdom 18-Jul Denmark 25-Jul European Financial Stability Facility 8-Aug Belgium 19-Sep Ireland 26-Sep Germany 26-Sep Spain 10-Oct Netherlands 10-Oct Italy 10-Oct Finland 7-Nov France 7-Nov Portugal 21-Nov Austria 28-Nov Cyprus 5-Dec Sweden 5-Dec Greece 12-Dec (Reporting by Marc Jones; Editing by Catherine Evans)

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