The board of the International Organization of Securities Commissions (IOSCO) published the Final Report “Observed Impact of COVID-19 Government Support Measures on Credit Ratings“. IOSCO is the global standard setter for securities markets regulation.

The pandemic’s economic and market turmoil led to many credit ratings downgrades and has put credit rating agencies (CRAs) and their credit ratings into greater regulatory, industry and media focus. Since March 2020, FitchRatings, Moody’s, and Standard & Poor’s (S&P) have together issued over 20,000 credit downgrades across varying asset categories and jurisdictions.

IOSCO’s review shows that the CRAs considered the COVID-19 related government support measures (GSMs) in their credit ratings and that GSMs had a substantial role in alleviating the downward pressure on credit ratings during 2020. “However,” writes the board of IOSCO in the report, “as the aftermath of the economic shock from the COVID-19 health crisis continues to unfold into 2021, it remains important to continue to consider the effects of the GSMs across credit ratings and credit rating methodologies.” In this regard, IOSCO concludes that the impact of GSMs on credit ratings should continue to be regularly monitored through supervisory channels.

“Ultimately, the shape of the recovery will be key to future credit rating actions. Although CRAs have indicated in public reports that they do not expect to adopt further wide-ranging reassessments of credit ratings, there remains considerable uncertainty around the future economic recovery”, fears IOSCO.

It is not only interesting what is to be read in the report. The unspoken information is just as interesting: