Published credit ratings are of course used for many purposes, not just for regulatory compliance. They are important at the macro-level in the area of financial stability and, crucially, have great impact at the micro-level in their impact on rated issuers and instruments.
The published credit ratings of the major NRSRO-approved rating agencies were originally intended to enable investors/counterparties to form a view on the credit risk of an individual issuer/counterparty/instrument in connection with a proposed investment or transaction. Despite the wider use noted above, the fundamental use is still for investment decision making. Issuers – the major payers by far for ratings by NRSROs – pay because of the expected use for investment decision making.
Many issuers are themselves also, as investor and counterparties, users of ratings. However, we believe that the interests of issuers should be taken into account by regulators, not just those of users of ratings or the use of ratings for regulatory capital purposes.
