The German standards organisation DIN is proposing the creation of an International Standard for the credit rating process. The ACT has made representations saying that it fails to see the need for this form of quasi regulation since the relevant issues are adequately covered by the IOSCO Code of Conduct Fundamentals for Credit Rating Agencies.
Treasurers make extensive use of ratings for assessing external credit risks. Treasurers are often responsible for investing the surplus cash of companies and for dealing in the financial markets for all manner of financial instruments that can involve a large credit exposure to banks and financial institutions.
They can also be involved in influencing the investment decisions and credit policies of their pension schemes often using credit ratings as a key criterion. They are involved in insurance matters looking at the financial strength and claims paying ability of insurers, where again ratings play a part.
They may set policy for customer credit standards and limits. They can also be involved in new business developments abroad where country or sovereign ratings play a role. Treasurers are responsible for the funding of their organisations and as such are issuers in the capital markets of securities that carry a rating.
They will be the company officer responsible for getting and maintaining a rating to support this access to the markets. Our perspectives are those of the users of corporate credit ratings as used in the wholesale financial markets, rather than ratings of individuals at what might be termed the retail end of the market.
