For the first time, the European Securities and Markets Authority ESMA has reported a decline in market shares in Europe for both of the major US rating agencies. The authority thus discloses a remarkable development. Never before have the two market leaders, who have been issuing their credit ratings worldwide according to recognized standards and criteria for around 100 years, had to give up market shares in favor of agencies that have their headquarters in Europe.

In addition to European agencies, the winners include competitors of the two market leaders Standard & Poor’s and Moody’s in the USA, namely Fitch Ratings with a market share that has increased from 16.62% to 17.55%, and DBRS Ratings, with a market share of 2.46% which increased to 2.99%. The Canadian DBRS Ratings was taken over by Morningstar, a US rating agency that is the undisputed leader in the rating of mutual funds. The insurance specialist A.M. Best Rating Services could also increase its market share, from 0.82% to 0.95%. A.M. Best Rating Services shows, how the decades-long focus on the insurance industry pays off in order to be increasingly perceived in the market as a Credit Rating Agency (CRA). All five agencies named are controlled by parent companies in the United States.

According to the European Securities and Markets Authority ESMA, the largest rating agencies domiciled in Europe still do not each have a full percentage point market share of the European rating market. The largest rating agencies with roots in Europe are the Italian-based Cerved Rating Agency and The Economist Intelligence Unit, which belongs to the Economist Group in London. While the Italian agency, which also offers its services in the European Union, improved from 0.81% to 0.84%, The Economist Intelligence Unit suffered a market share loss from 0.87% to 0.79%. However, this should be understood against the background that The Economist Intelligence Unit shows a clear focus on micro and macroeconomic research and is known for country ratings, i.e. not for ratings for issues and issuers from the group of industrial companies, financial service providers – i.e. banks in particular and insurance companies – and does not compete in the rating of asset-backed securities, etc. The bottom line is that practically nothing has changed in the market shares of the two largest European agencies in the overall European market.

Among the five types of credit ratings distinguished by ESMA, The Economist Intelligence Unit only offers ratings in the “Sovereign and Public Finance” sector. In the other four market segments this agency does not compete with competitors within the European Union. A.M. Best Europe Rating Services achieves its market share only through the activities of this agency in the “Corporate Non-Financial” and “Corporate Financial” market segments (the latter includes the insurance industry). The market share of Cerved Rating Agency must also be analyzed against the background that this agency only reports ratings in the “Corporate Non-Financial” segment and is not in direct competition with other competitors in the other four market segments.

Remarkable changes – if you disregard the reduction in the market shares of S&P Global Ratings Europe and Moody’s Investors Service – there are only among the “further ran”. For example, a rating agency in Berlin superseded Creditreform Rating, ranking 8th. This is remarkable because Creditreform Rating, as a subsidiary of Creditreform AG in association with the Verband der Vereine Creditreform e.V. in Germany, has a very strong brand name and can rely on over 158,000 members of the association worldwide. While Creditreform Rating only has a market share of 0.53%, previously 0.55%, the Berliners now make it to 0.62%, previously 0.49%. This corresponds to a growth in market share of more than a fifth within a year. It remains, however, that of the agencies based in Germany, the one with the largest market share only occupies eighth place in the European Union.

In contrast to A.M. Best Europe Rating Services, Cerved Rating Agency, The Economist Intelligence Unit and Creditreform Rating, Berlin’s Scope Ratings accepts rating orders from any type of issuer, including in the “Corporate Insurance” market segment that is not served by Creditreform Rating, for example. Through so-called “rating shopping”, issuers look for the agency that is best able to serve their interests. If an agency does not even offer certain ratings, the rating agency concerned cannot benefit from this earnings effect from “rating shopping”.

In contrast to all other agencies, the Berlin agency sees itself as – quote – “the leading European provider of independent credit ratings” with a market share of 0.62%. This claim is due to the tireless work over the past 20 years, which was not discouraged by the bankruptcy of the previous agency FondScope, from which today’s agency Scope Ratings emerged. Over the past two decades, the agency has not yet been able to generate profits in any year, but annual deficits have accumulated. The permanent losses are borne by a small group of well-known personalities, financially strong institutional investors and strategically motivated shareholders of rated companies.

There are no really noticeable movements among the other agencies, if one also takes into account that some agencies have given up in the meantime and thus also have given up market share. The dynamic growth of Kroll Bond Rating Agency Europe deserves special mention, as the agency increased its market share tenfold from 0.03% to 0.34%. With this market share, Kroll Bond Rating Agency Europe is now the largest rating agency ahead of all the other 17 names in the last places in Europe.

If one measures the market share not in terms of the sales achieved, but in terms of the sheer number of financial instruments for which ratings were given, an even more differentiated picture emerges. The market shares in the “Structured Finance” segment, which is so important for rating agencies, have shifted significantly in favor of Scope Ratings: While the Berlin agency only achieved a market share of 1.2% in the previous year, it was up 1.5% in 2019, while Moody’s market share fell from 59.5% to just 55%. In this market, Fitch Ratings is in second place with 44.5% (after 45.0%), S&P with a slightly increased 37.5% (after 35.8%) and DBRS with 14.3% also better than before (13.9%). According to this statistic, the market shares do not add up to 100% since the same financial instruments can be assessed by several agencies.

Anyone who already has a rating from Moody’s or S&P can afford to add the rating of a lesser-known, local agency without having to expect any disadvantages when placing the bond, especially not if a smaller agency delivers an even more favorable credit rating. An example of this is given by the issuer Grenke, who received a long-term rating of BBB+ from Standard & Poor’s, but A from GBB Rating, domiciled in Germany.

According to Article 8d of the EU Regulation on Credit Rating Agencies, the European Securities and Markets Authority ESMA is only required to calculate the market shares of the rating agencies it supervises. Therefore, there is no information in the authority’s document on the absolute basis on which the figures were calculated. Since the market shares in the EU are only calculated on the basis of the figures that must be reported to ESMA, the relevant world market shares are actually considerably lower than the EU market shares calculated by the EU authority.

If, for example, the 57 Chinese rating agencies or even the more than 200 other rating agencies worldwide based outside Europe and with no activities in the European Union market were included in the calculation, the world market shares for the 27 agencies recorded in the EU in 2019 would naturally be considerably lower.

According to Section 267, the German Commercial Code describes the size classes of companies that are exempt from certain disclosure obligations. Small corporations are those that do not exceed at least two of these three criteria: total assets of € 6 million, sales of € 12 million in the twelve months prior to the reporting date or an annual average of fifty employees; medium-sized corporations are those that exceed at least two of the three characteristics specified in paragraph 1 and do not exceed at least two of the three following characteristics: € 20 million balance sheet total, € 40 million revenue in the twelve months before the reporting date or an annual average of two hundred and fifty employees.

The agencies based in Germany – even the ones describing themselves as “leading” – do not exceed these thresholds, so that, unlike the US agencies, they are not obliged to disclose their financial statements. From this fact it can be concluded that these German agencies are located at most in the range of one thousandth of the sales volume of the market leaders S&P Global and Moody’s, especially since the German agencies – unlike the US American giants – are almost unknown in Africa, Asia and America. Moody’s, for example, has a global presence with more than 11,400 employees in 33 offices around the world and serves customers in more than 100 countries.

Moody’s Corporation recorded TTM (Trailing Twelve Months) sales of US $ 5.3 billion in the third quarter of 2020 with an operating profit margin of around 45%. S&P Global achieved even higher total sales, with a large part being generated by services beyond credit rating services. For example, S&P has secured market dominance by taking over IHS Markit for US $ 44 billion. All agencies established in Europe are far from being able to participate in these business arenas, which are important for institutional investors as well as for public and private issuers. Moody’s secured e.g. In 2017, with the takeover of Bureau van Dijk, information on around 375 million companies, so Moody’s can be considered the most important point of contact for company data.

In this respect, S&P Global Ratings with a market share of 40.40% in the EU alone (previously 42.09%) and Moody’s Investor Service with a market share of 33.12% (previously 33.39%) are unlikely to see the market share gains of the small agencies as a dangerous “game changer”, even if Scope Ratings has already collected data on hundreds of companies and has formed its own opinions on many issuers. Especially since these rating classifications from the Berlin agency hardly differ – if available – from the ratings of the market leaders, there is no disruptive effect and no reason for investors to concern themselves with these ratings. More than 70% of all sales in the recognized ratings business in the European Union remain on the books of Moody’s and S&P, and if you add Fitch Ratings, more than 90% of all payments from Europe go to these three US agencies alone .

Hardly any professional investor knows to enumerate smaller rating agencies supervised by ESMA, let alone report on their current ratings. In the practice of the financial markets, most of these small agencies really do not play any role. With a combined market share of more than 90%, the importance and role of the three leading US agencies S&P, Moody’s and Fitch Ratings are therefore still significantly underestimated, because the sales do not reflect the interests of investors, who mainly rely on the opinions of these experienced rating agencies. If a smaller credit rating agency is commissioned by an issuer to develop and disseminate a rating, this says nothing about the effectiveness of this mandate. Because of the small number of ratings issued, there is no statistical, scientifically based evidence that ratings from these small agencies bring the assessed issuer a significant cost advantage.

Since the fees charged to rating agencies by the European Securities and Markets Authority are calculated based on their business volume, the leading US agencies have an interest to report low sales volumes to ESMA. Thus their market shares in the EU appear as low as possible. Additional fees for other services are charged by their other subsidiaries. Accordingly, the market shares of the smallest agencies are overestimated, because they are not burdened with proportionally higher administrative fees from their supervisory authority when reporting higher sales. This is due to the fee table applicable to the smaller agencies. In addition, the mini-agencies have an interest in being reported with high market shares to comfort their partners or shareholders, who are plagued by ongoing losses of their rating enterprise.

The highly complex EU regulation of rating agencies, which was launched in 2009 with the aim of breaking the US oligopoly, has not changed the fact that only the leading agencies provide issuers with the required “entry ticket” to the world financial markets. Nothing has changed in their dominance – on the contrary: the market share of these three agencies, S&P, Moody’s and Fitch Ratings, was 87.02% in 2012, and now is 91.07%, even higher than it was when politicians in Europe believed that the opportunity of the financial crisis could be used to restrict the power of US credit rating agencies. After a lost decade, it is time to think about deregulation and finally to abolish the privileges granted to all agencies registered or certified in the EU.

There are almost 200 countries in the world. Many countries do not have specific regulations on rating activities, but most industrialized countries do have laws on Credit Rating Agencies (CRAs). Credit Rating Agencies are required to get registered, licensed, recognized or certified.

Until the Credit Rating Agency Reform Act of 2006 was introduced in the United States, there was no really orderly procedure for recognizing Credit Rating Agencies. However, if ratings are used in law to regulate certain issues, provisions are also required as to which agencies may issue the relevant ratings.

Certain authorities are charged with administering the rules of their countries with respect to the practices of Credit Rating Agencies in determining credit ratings for the protection of users of credit ratings and in the public interest. They are promoting accuracy in credit ratings issued by Credit Rating Agencies. The authorities are working to ensure that credit ratings are not unduly influenced by conflicts of interest and that Credit Rating Agencies provide greater transparency and disclosure to investors.

In support of this mission, competent authorities conduct examinations of Credit Rating Agencies to assess and promote compliance with statutory and other requirements.

• They monitor the activities of Credit Rating Agencies,
• conduct outreach with investors, issuers, and other industry participants,
• develop and administer rules affecting Credit Rating Agencies; and
• provide guidance generally with respect to the regulatory initiatives related to Credit Rating Agencies.

The competent authorities publish lists of the Credit Rating Agencies that they have recognized or certified. For various reasons, these are not always visible. Have a look at what happened on Monday, July 27, 2020 @ 09:00 – the relevant page of the website of the European Securities and Markets Authority (ESMA) was not accessible to everybody. No matter, which device and which browser you are using, you would not get their information online.

We therefore have lists of the data available to us here. In contrast to the official lists, our ones include links to Credit Rating Agencies’ websites. This makes it easy to get an overview of all recognized agencies and to contact Credit Rating Agencies. Please ask us for updates.

To find the Credit Rating Agencies recognized in the respective jurisdictions, follow the links in this table.

The table refers to the statutory rating requirements mandated by laws and regulations. In practice, however, ratings are often “encouraged”, “advised” and/or “requested by investors”. Please note that this is not an exhaustive list. RATING EVIDENCE has detailed information for a number of other countries. It should also be borne in mind that in some countries the regulation of credit rating agencies is not left to just one authority, but rather that a plurality of authorities within the same jurisdiction recognize credit rating agencies for different purposes according to different standards. Here are some examples:

• Bond Public Offering,
• Bond Private Placement,
• Debt instrument other than bond (Medium Term Notes, Commercial Paper)
• Bank Loan,
• Asset Backed Security Issue,
• Public Issue of Equity Shares,
• Banks,
• Non-bank Financial Institution (before IPO),
• Non-Life & Life Insurance Company,
• Microfinance Banks (MFBs),
• Offshore Bond Market/External Commercial Borrowings,
• Public Deposits of Non-Banking Finance Companies,
• Security Receipts issued by Asset Reconstruction Companies,
• Micro & Small Enterprises (MSE),
• Grading of Maritime Training Institutes,
• Parallel Marketers of Liquified Petroleum Gas/Superior Kerosene Oil,
• Energy Services Companies,
• Renewable Energy Service Companies (RESCOs),
• System Integrators (SI),
• Structured Products
• Modaraba Certificates of Musharaka.

Please see each country’s page for details.

Authorization

New Regulation of Credit Rating Agencies is on the Way

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Investment Guidelines of German Municipalities in Practice

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Part 2 Funds available according to the provision listed in “Information from the Hessian Ministry of the Interior on investments and deposit protection” of May 29, 2018 can be invested in shares in investment funds within the meaning of the Investment Modernization Act (Investmentmodernisierungsgesetz). The aforementioned requirements have already been reported here in Part 1.…

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ESMA Chair, Verena Ross, takes a look at the rating market structure today, and sees that there are 24 CRAs in the EU registered with ESMA, located in 13 different Member States. She delivered a keynote speech at the European Association of Corporate Treasurers (EACT) Summit. Verena Ross spoke, among other things, about Credit Rating…

Disclosure Requirements for Initial Reviews and Preliminary Credit Ratings Discussed

The European Securities and Markets Authority (ESMA) published its “Final Report” with “Guidelines on Disclosure Requirements for Initial Reviews and Preliminary Ratings“. The purpose of these Guidelines is to deliver guidance that will address inconsistencies in the application of these requirements by Credit Rating Agencies (CRAs), and by extension reduce the risks that are posed…

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ACRA Analytical Credit Rating Agency

The Russian Government set a minimum credit rating for banks that service federal budget funds (the document is published on the official website of the Russian Federation Ministry of Finance at http://government.ru/docs/28240/).

The federal budget funds may be placed on deposits with bank that have a credit rating of at least A-(RU) under the ACRA’s (Analytical Credit Rating Agency; Russian: Аналитическое Кредитное Рейтинговое Агентство) national rating scale. A-(RU) reflects a moderately high creditworthiness, with some sensitivity to adverse changes in commercial, financial and economic conditions. Moreover, the Federal Treasury has the right to establish stricter credit rating requirements.

ACRA is a rating agency based in Moscow, Russia. It was established in 2015, due to their only relative independence colloquially known as the “Putin Credit Rating Agency”. Due to the withdrawal of US-based rating agencies because of legislative changes and sanctions against Russia, ACRA expects to become Russia’s main ratings issuer. ACRA apparently does not issue ratings to companies outside of Russia.

Expert RA

Expert RA was on the list of credit rating agencies accredited by the Bank of Russia. Being rated by Expert RA is among the official requirements imposed on banks, insurers, pension funds, and issuers. Expert RA ratings are used by Bank of Russia, Ministry of Finance, Ministry of Economic Development, Moscow Exchange and other financial market participants.

National Rating Agency Limited Liability Company (NRA)

National Rating Agency Limited Liability Company (NRA) was in the register of ratings agencies accredited with the Ministry of Finance of the Russian Federation. Ratings were officially recognized by the Central Bank of the Russian Federation, Vnesheconombank, Federal Financial Markets Service, Rusnano, Ministry of Agriculture of the Russian Federation, Agency for Housing Mortgage Lending, RTS and MICEX stock markets, National Association of Stock Market Participants, National Securities Association, National Managers’ League and  Association of Russian Banks. On January 13, 2017 NRA informed the market participants that it will not take any rating actions with respect to credit ratings (including NRA’s Credit Rating, Financial Reliability and Financial Strength Ratings) assigned before the end of the transitional period (before January 13, 2017) until it is entered in the Register of Credit Rating Agencies. NRA continued assigning and updating non-credit ratings, such as the Reliability Rating, the Service Quality Rating, the Corporative Management Quality Rating, the Risk Management Quality Rating, the Employer Attractiveness Rating, and some other. The assignment and update of the said ratings will go on as a normal course of NRA’s business, without any changes. NRA examined the Bank of Russia’s statement of reasons for its decision not to include NRA in the Register of Credit Rating Agencies in order to prepare a new folder of documents and re-apply for registration.

In Ukraine, a person acquires the right to define ratings from the date of the issuance of the Certificate on Inclusion into The State Register of Authorized Rating Agencies.

Here is a list of Credit Rating Agencies registered by the Banco Central de Uruguay:

The European Commission’s decision to repeal the equivalence status for Singapore Credit Rating Agencies does not impact the operations of Credit Rating Agencies in Singapore. As confirmed by the European Commission, Credit Rating Agencies in Singapore will continue to be able to access the European Union market through the endorsement regime which they currently operate under. Under this regime, ratings issued by Credit Rating Agencies in Singapore are endorsed by their related entities in the European Union, and can continue to be recognised and used for regulatory purposes in the European Union.

There are two existing regimes for Credit Rating Agencies outside of European Union to have their ratings recognised and used for regulatory purposes in the EU, namely certification through the equivalence regime or endorsement. While Singapore’s regulatory regime for CRAs no longer has equivalence status, Singapore continues to be on the list of countries that the European Securities and Markets Authority (ESMA) has deemed as meeting the legal and supervisory framework for the endorsement regime.

Credit Rating Agencies play numerous roles in the financial system of Singapore. For example, direct insurer who apply for a licence need to report about credit raitngs. Since applicants need a licence to carry on life and/or general insurance business in Singapore, they have to meet admission criteria. The Monetary Authority of Singapore assesses applications for direct life and general insurance licences using a number of criteria, among them past and present credit ratings by international rating agencies, including Standard and Poor’s, A.M Best, Moody’s and Fitch.

Since June 30, 2017 the Monetary Authority of Singapore provides a Singapore-dollar Credit Rating Grant to encourage issuers in the Singapore-dollar bond market to issue rated bonds. The Singapore-dollar Credit Rating Grant covers the cost of issuer, programme and issue ratings from Fitch Group, Moody’s, and Standard & Poor (S&P). For each qualifying issuer, the SGD Credit Rating Grant can cover credit rating expenses from multiple issuances subject to the funding cap.

Although investors today generally have access to publicly available information such as company financial statements and offering documents when they consider their bond investments, the Monetary Authority of Singapore believes that greater availability of credit ratings in the domestic bond market will help to further improve market transparency, by providing timely and independent assessments of the credit worthiness of issuers throughout the life of a bond.

Credit ratings can also benefit bond issuers. Many regular issuers in the Singapore-dollar bond market are currently unrated and rely mainly on the same pool of domestic investors. Credit ratings will allow these issuers to attract a broader and more diverse investor base, including international institutional investors. The Singapore-dollar Credit Rating Grant is open to both foreign and domestic issuers.

The following rating agencies shall be Credit Rating Agencies approved by the Office of the Securities and Exchange Commission of Thailand to issue credit rating for instruments or businesses related to issuance and offer for sale under the Notification of the Capital Market Supervisory Board and instruments. They are required to provide credit ratings under the rules related to investment of mutual funds and private funds.

In the case where the credit rating for instruments or businesses related to issuance and offer for sale under the Notification of the Capital Market Supervisory Board, the domestic Credit Rating Agencies shall assign the credit rating within the a specified scope. Credit rating agency business is excluded from securities business in the category of securities investment advisory. In case credit rating agencies established under a foreign law issue a credit rating for instruments or businesses related to issuance and offer for sale of instruments in the Kingdom of Thailand, such credit rating agencies shall comply with the following requirements:

• In case of issuing the credit rating to structured finance product, symbols used shall be different from those used in issuing the credit rating to general debt instruments, provided that the symbols’ meanings shall be clearly explained and disclosed to investors;
• in case of unsolicited rating disclosed in Thai language, the following requirements shall be complied:
  • policy and practice guideline for issuance of the credit rating in such cases shall be clearly specified;
  • in disseminating the credit rating to the public, the following information shall always be correctly and completely disclosed the issuance of the credit rating was not hired by instrument issuer and whether or not the instrument issuer participated in providing of information for the purpose of issuing the credit rating; sources of information used in issuing the credit rating. If any credit rating agency lacks suitability or credibility in undertaking of credit rating business or fails to comply with guideline in undertaking of credit rating business as specified by International Organization of Securities Commissions (IOSCO) or fails to comply with the requirement specified in Thai law.

Comisión Nacional Bancaria y de Valores (CNBV) main function is to inform the market about the real risks that the investing public faces in financial intermediation. Regulation is essential for greater transparency in its actions and less exposure to conflict of interest. The Comisión Nacional Bancaria y de Valores supervises 7 Credit Rating Agencies, called Instituciones Calificadoras de Valores (ICVs) in Mexico, within the framework of the Securities Market Law, the General Corporations Law Mercantile and Provisions on the matter.

In accordance with current regulations, among other information, these institutions must have available on their website the meaning and scope of their qualifications, the codes of conduct that govern their actions, the methodologies and procedures they use for the study, as well such as the analysis of the credit quality of the entities or issuers, and any substantial changes in them must be revealed so that they can be consulted by the investing public.

Comisión Nacional Bancaria y de Valores powers over Credit Rating Agencies:

• Carry out inspection and surveillance.
• Make observations and, where appropriate, order the adoption of measures aimed at correcting the irregular facts, acts or omissions that it has detected..
• Impose sanctions of an administrative nature.
• Issue provisions that contain minimum requirements that must be included in its Code of Conduct.
• Determine the means through which Credit Rating Agencies must disclose to the public the ratings they make on securities already registered or to be registered in the National Securities Registry.
• Issue provisions on the financial, administrative and operational information that rating agencies must submit, as well as their modifications and cancellations.
• Revoke their authorization when they commit serious or repeated infractions to the provisions of the Securities Market Law; are declared bankrupt, or agree to its dissolution and liquidation, prior agreement of its Governing Board.
• Authorize their merger or division, with the prior agreement of their Governing Board.
• Require data, reports, records, minute books, documents, correspondence and other information deemed necessary for supervision.
• Order the suspension of the rating service when in its judgment there is a conflict of interest between the client and the Credit Rating Agency.
• Order the suspension of the publicity of the Credit Rating Agencies when in its judgment it implies inaccuracy, lack of clarity, unfair competition, or may lead to error.
• It is important to mention that the ratings issued by Credit Rating Agencies are an opinion on the credit quality of an entity or issue, and in no way represent a recommendation on the purchase or sale of a certain security.

Although each rating agency has its own rating scale, in general the rating levels granted by the Credit Rating Agencies could be grouped into: AAA, AA, A, BBB, B, CCC, CC, C, D. However, for greater In detail, the Comisión Nacional Bancaria y de Valores recommends to review the scales published on the internet pages of each Credit Rating Agency (see below).

The regulation of these types of entities requires that the information they disclose to the public be updated, relevant, timely, of quality and clear. The information provided by the Credit Rating Agencies allows the investor to have reliable reference information for investment decision making.

Under the Working Committee on Financial Services Liberalisation, the Association of South-East Asian Nations (ASEAN) completed the Eighth Package of Financial Services Commitments (Eighth Package), which was signed by the Association of South-East Asian Nations Finance Ministers on April 5, 2019. To enhance access into the capital market via the Eighth Package, the Suruhanjaya Sekuriti Securities Commission Malaysia (SC) committed to allow 100% ASEAN-owned credit rating agencies in Malaysia. This offer came into force on October 7, 2019. Among them, are these two Credit Rating Agencies in Malaysia:

The Superintendency of Companies, Securities and Insurance of Ecuador, Superintendencia de Compañías, Valores y Seguros (SC), listed on August 6, 2020 the following Credit Rating Agencies:

The Superintendencia General de Valores (SUGEVAL) is the supervisor of Calificadoras de Riesgo, Credit Rating Agencies in Costa Rica. Here is a complete list of Credit Rating Agencies enrolled in Costa Rica as of August 6, 2020..

Here are all recognized Credit Rating Agencies with name, address, district, city, state, postal addressing code, direct distance dialing, phone, fax, names of the risk rating director and internal controls director, registration date, Brazil national registry of legal entities number and current situation as of August 6, 2020.

In addition to the credit risk rating agencies registered with the Securities and Exchange Commission of Brazil, there are others, domiciled in third jurisdictions, which are recognized by the Securities and Exchange Commission for proving compliance with the requirements established by article 5 of CVM Instruction No. 521/2012. So far, agencies in this condition are as follows:

• A.M.Best Rating Services, Inc., headquartered in the United States of America and supervised by the Securities and Exchange Commission (“SEC”).
• S&P Global Ratings, headquartered in the United States of America and supervised by the Securities and Exchange Commission (“SEC”).

The Australian Securities and Investments Commission (ASIC) published an information sheet (INFO 143) for credit rating agencies providing services in Australia. It gives guidance on the meaning of certain conditions that apply to these credit rating agencies under their Australian financial services (AFS) licence.

It covers the scope and purpose of Australian Securities and Investments Commission’s guidance, separating advisory services from credit rating services, applying methodologies in a continuous manner, timely disclosure of actual and potential conflicts of interest, periodic review of methodologies and models, and review of and disclosure about affected ratings after material changes. The conditions covered by Australian Securities and Investments Commission’s information sheet reflect certain provisions of the International Organization of Securities Commissions (IOSCO) Code of Conduct Fundamentals for Credit Rating Agencies (IOSCO Code), which credit rating agencies must adopt with specified modifications under their Australian financial services licence.

The guidance is provided in the context of the assessment by the European Securities and Markets Authority (ESMA) as mandated by the European Commission of whether Australia’s regulation and supervision of credit rating agencies is equivalent to the European Union’s Regulation on Credit Rating Agencies (EU Regulation).

Under the EU Regulation, regulation and supervision of credit rating agencies in Australia that is at least as stringent as that in the European Union is necessary for ratings prepared in Australia to be endorsed for use in the European Union. Regulation and supervision of credit rating agencies in Australia needs to be considered equivalent in order for ratings prepared in Australia by a credit rating agency without any legal presence in the European Union to use those ratings in the European Union

The Credit Rating Agencies listed below have been registered in accordance with Section 5(1) of the Credit Rating Services Act, 24 of 2012 in South Africa. The list is published by the Financial Sector Conduct Authority in accordance with section 5(10) of the Credit Rating Services Act and is updated within five working days of adoption of a registration decision.

The Canadian Securities Administrators identified Designated Rating Organizations, and imposed requirements on credit rating organizations wishing to have their credit ratings eligible for use in securities legislation. The rule of the Canadian securities regulators establishes a regulatory framework for the oversight of credit rating organizations by requiring them to apply to become a “Designated Rating Organization” and adhere to rules concerning conflicts of interest, governance, conduct, a compliance function and required filings.

Credit Rating Agencies are those entities that are dedicated to making risk ratings. In Argentina, entities must be registered with the Comisión Nacional de Valores in order to carry out the activity and they can be private companies or public universities.

Public Universities

Unidad CEPAF – Agente de Calificación de Riescos Universidad Pública (UBA)

Universidad Nacional de San Martin

Universidad Nacional de Tres de Febrero

Universidad Nacional del Centro de la Provincia de Buenos Aires

An application for permission to form a credit rating company by persons meeting the eligibility criteria accorind to the Credit Rating Company Regulations shall be made to the Securities and Exchange Commission of Pakistan along with a number of documents. The Securities and Exchange Commission of Pakistan on being satisfied that the person seeking permission to form a Credit Rating Company has fulfilled the criteria in terms of the regulations may permit by an order in writing to establish a credit rating company.

The permission granted by the Securities and Exchange Commission of Pakistan to form a Credit Rating Company shall be valid for a period of six months unless extended for a maximum period of further three months under special circumstance, on the application of the promoters made before the expiry of initial six months.

The Securities and Exchange Commission of Pakistan may after making necessary inquiries and after obtaining such further information, as it may consider necessary, and if it is satisfied that each of its promoters or sponsors, directors, chief executive and chairman of the board of directors fulfill the terms and conditions mentioned in the Fit and Proper criteria given grant a licence, subject to compliance with the conditions of the grant of licence as specified in the regulation of Credit Rating Companies.

For renewal of its licence, the Credit Rating Company shall, one month prior to the date of expiry of its licence, apply to the Commission. The Securities and Exchange Commission of Pakistan if satisfied that the applicant continues to meet the requirements for licensing and is eligible for renewal of licence shall renew the licence for one year and issue a certificate of renewal of licence to the Credit Rating Company.

The detailed procedure for grant /renewal of licence and Annexures and Forms as mentioned above may be seen in Credit Rating Companies Regulations, 2016.

The following Credit Rating Agencies were registered according to the Credit Rating Companies Regulations, 2016:

The Swiss Financial Market Supervisory Authority FINMA supervises financial institutions making use of the services of Credit Rating Agencies, e.g. for the capital-adequacy calculations carried out by banks. Supervised institutions can use ratings to meet a number of regulatory requirements. In certain specific cases, only ratings from agencies recognised by FINMA may be used. The requirements for recognition are set out in FINMA Circular 2012/1 “Rating agencies”. They are designed to ensure that the quality of ratings used for regulatory reporting meets certain minimum standards. FINMA recognized the following Credit Rating Agencies. Please note that recognition can be limited to certain types of ratings.

The purpose of supervising Credit Rating Agencies in Japan is, in view of specific problems in their governance, to ensure the appropriate business operations of Credit Rating Agencies in Japan, and to bring about the appropriate exercise of their functions.

​As in many other countries, the work of Credit Rating Agencies has been regulated in the Kingdom of Saudi Arabia, since ratings are referenced in various ways in the financial system. It is therefore necessary to determine which Credit Rating Agencies give the relevant ratings. On November 10, 2014, the Capital Market Authority of Saudi Arabia issued the Credit Rating Agencies Regulations, coming into effect September 1st 2015. The Capital Market Authority of Saudi Arabia announced on September 16, 2015 that it received applications from six companies to be authorized to carry out credit rating activities in the Kingdom of Saudi Arabia.

Six companies applied at that time to be licensed to conduct credit rating activities in the Kingdom under the new regulations:

• Saudi Credit Bureau ((SIMAH),
• Standard & Poor’s Credit Market Services Europe Limited,
• Moody’s Investors Services Middle East Limited,
• Fitch Ratings,
• The Islamic International Rating Agency; and
• A.M. Best Europe- Rating Services Ltd.

The Credit Rating Agencies Regulations has been implemented to regulate and monitor the conduct of Credit Rating Agency activities in the Kingdom of Saudi Arabia, and to specify the procedures and conditions to be met prior to obtaining authorization to conduct such activities.

Authorization of Credit Rating Agencies

Birth of the Morningstar Medalist Rating

Morningstar to Unite Two Forward-Looking Rating Systems into One.

August 31, 2022August 31, 2022

Anyone Not Issuing Bonds Now is Hoping for Better Times

S&P Global share price collapsed today. The background to this is the company’s outlook, which has already been significantly corrected after just one month. What reads like bad news also contains a hidden positive signal.

June 1, 2022June 1, 2022

S&P Global Ratings Buckles under Political Pressure

May 18, 2022May 18, 2022

Securitization Rating Agency of the Year

The embarrassment for European credit rating agencies is certain even before the voting has started. “US Securitzation Awards 2022 – voting now live!” This is the call from GlobalCapital, inviting market participants to vote for the best rating agency when it comes to securitization. This is the choice:

May 4, 2022May 4, 2022

S&P Global Ratings and Moody’s Investors Service Both Are Feeling the Lack of Issuance Activity

S&P Global Ratings reported a revenue decrease of 15% to $868 million in the first quarter of 2022. Transaction revenue decreased 31% to $404 million. Transaction revenue was negatively impacted by a year-over-year decrease in debt issuance across all categories, but particularly within high-yield, which decreased approximately 68% year-over-year. Non-transaction revenue increased 7% to $464…

May 3, 2022May 3, 2022

Top Credit Ratings from Google’s Search World

Four US rating agencies give Triple-A credit ratings to a bankrupt bank? On Friday 22 April 2022, the Amsterdam District Court, at the request of Amsterdam Trade Bank N.V. (ATB) and after hearing the Nederlandsche Bank N.V., declared ATB bankrupt. Declaring the bankruptcy means that a trustee has been appointed to wind up the Trade…

April 25, 2022April 25, 2022