Article 39(b)2 of the Regulation on credit rating agencies states that the European Commission shall adopt a report by the end of 2014 on the appropriateness of the development of a European creditworthiness assessment for sovereign debt. However, before adopting such a report the Commission is to receive technical advice from the European Securities and Markets Authority (ESMA).
In its request for technical advice, the Commission has asked ESMA to provide input on the issue of sovereign ratings and rating processes including an overview of the market for sovereign ratings, information on operational issues regarding sovereign ratings, information on sovereign rating processes as well as lessons drawn from ESMA’s supervisory experience.
ESMA has now published a revised version of its technical advice to the Commission on the development of an EU creditworthiness assessment for sovereign debt. In an accompanying summary, ESMA states that the advice has been revised to reflect an amended figure in table 1 (outstanding sovereign ratings in the EU by CRA) and two re-classifications of solicitation status in table 2.
The technical advice also highlights that there are four main points that ESMA emphasises should be important areas for further examination when considering the appropriateness of the development of a European creditworthiness assessment of sovereign debt, that comprise:
- independence of the rating process;
- review function;
- confidentiality; and
- sufficiency of resources.
View Technical advice – in accordance with article 39(b)2 of the CRA Regulation regarding the appropriateness of the development of a European creditworthiness assessment for sovereign debt, 17 September 2014
View Technical advice in accordance with article 39(b) 2 of the CRA Regulation – summary, 17 September 2014