On 31 January 2022, the European Securities and Markets Authority (ESMA) published its Final Report which sets out guidelines on disclosure requirements for initial reviews and preliminary ratings.
The guidelines apply to CRAs established in the EU and registered with ESMA and concern matters relating to the public disclosures of CRAs in accordance with Article 10(2) and Section D point 6 of Annex I of the CRAR.
The Credit Rating Agency Regulation (CRAR) sets out various requirements that are designed to provide clarity to the market around whether entities or debt instruments have been subject to initial review or preliminary rating by credit rating agency’s (CRAs), before receiving a credit rating. The objective of these requirements is to mitigate against the effects of rating shopping.
The guidelines are structured according to three main parts that establish ESMA’s views on:
- how the term “initial review and preliminary rating” should be understood for the purposes of the CRAR’s public disclosure requirements;
- the content and timing of CRAs public disclosures for interactions that meet the standard of “initial review and preliminary rating”; and
- the steps to ensure these public disclosures are more accessible for investors and the market.
These guidelines will come into force from 1 July 2022.