The Association of Corporate Treasurers (ACT) strongly supports the European Association of Corporate Treasurers’ (EACT) position paper on proposed additional regulation of credit rating agencies The EACT filed the paper yesterday with the European Commission in response to the Commission’s proposals.
European Commission proposals before the European Council and Parliament would, if unchanged, adversely affect non-financial (industrial and commercial) companies, both as rated debtors and as users of ratings in their business activities. We are particularly concerned about:
- Proposed mandatory rotation of credit rating agencies
- Proposed oversight by the European Securities Market Authority (ESMA) of rating agency methodologies (as opposed to seeing that agencies have followed agreed processes)
- Proposed increased civil liabilities of credit rating agencies that seem to confuse them with investment advisors or credit insurers.
The draft report of Rapporteur Domenici for the ECON Committee of the Parliament about the Commission’s proposals adds additional concerns, particularly:
- Proposed move to an entirely un-solicited ratings system that would especially affect weaker credits and mid-sized and smaller companies
- Proposed market share limitations that would exclude many companies from the types of ratings they want for their obligations
- Credit ratings are opinions about the future, so proposed prohibition of “outlooks” for sovereign ratings (that have great influence on corporate ratings) is a contradiction
- Proposed prohibition of the use of “opinions” in relation to credit ratings is potentially misleading: ratings are just that – opinions, even if considered opinions and false certainty should not be implied.
---- ends ----
Media enquiries
For media enquiries and to find out more about the ACT, please visit the ACT Press Room.
Notes for editors