• Home
  • News
    • People moves
    • Africa
    • Asia
    • Australia
    • Canada
    • Caribbean
    • Domicile
    • Europe
    • Latin America
    • North America
    • Middle East
    • US
    • US
    • UK
  • Products
    • Funds
    • Pensions
    • Platforms
    • Insurance
    • Investments
    • Private Banking
    • Citizenship
    • Taxation
  • Fintech
  • Regulation
  • ESG
  • Expats
  • In Depth
  • Special Reports
  • Directory
  • Video
  • Advertise with us
  • Directory
  • Events
  • European Fund Selector
  • Newsletters
  • Follow us
    • Twitter
    • LinkedIn
    • Newsletters
  • Advertise with us
  • Directory
  • Events
    • Upcoming events
      event logo
      International Investment Nordic Forum 2021

      International Investment is delighted to announce the 2021 International Investment Nordic Forum which will take place on Tuesday March 9, at 9am (GMT). This curated virtual event will be broadcast live and will feature a series of fund manager interviews and presentations, as well as interviews with some of the Nordic regions top fund selectors.

      • Date: 09 Mar 2021
      • ONLINE, ONLINE
      event logo
      Sustainable Investment Festival 2021

      The Sustainable Investment Festival will run online from 22-25 June and will include thought-provoking presentations from renowned keynote speakers, innovative breakout events and sessions specifically tailored to meet the information needs of fund selectors, financial advisers, pension consultants, trustees and scheme managers.

      • Date: 22 Jun 2021
      • Online, Online
      View all events
  • European Fund Selector
International Investment
International Investment

Sponsored by

Sharing Alpha
  • Home
  • News
  • Products
  • Fintech
  • Regulation
  • ESG
  • Expats
  • In Depth
  • Special Reports
  • Video

Competitors jostle to take on bigger rating agencies

  • Madison Marriage
  • 12 March 2012
  • Tweet  
  • Facebook  
  • LinkedIn  
  • Send to  

Lesser-known rating agencies in markets such as Brazil, China and Germany are planning their challenges to S&P, Moody's and Fitch as new regulations take hold.

Lesser-known rating agencies in markets such as Brazil, China and Germany are planning their challenges to S&P, Moody’s and Fitch as new regulations take hold.

There are dozens of relatively unknown credit rating ­agencies that pose no real challenge to the monopoly of the Big Three agencies - S&P, Fitch and Moody's - in the credit and sovereign rating market. Up-and-coming firms include SR Ratings in Brazil, China's Dagong Global Credit Rating and Feri EuroRating Services in Germany.

Related articles

  • Ratings agency business model under fire
  • Feri plans expansion to Pfandbriefe and structured finance
  • Feri mulls expansion beyond funds and sovereign ratings
  • Chinese rating agency Dagong to open first European office in Milan in January

But thanks to a change in law, these agencies' obscurity could be about to change. Last November, the European Commission approved draft legislation on the regulation of rating agencies.

Internal market ­commissioner Michel Barnier wanted to tackle the fact that "ratings have a direct impact on the markets and the wider economy and thus on the ­prosperity of European citizens".

He added: "They are not just simple opinions… and rating agencies have made serious mistakes in the past."

Barnier said his first objective was to reduce over-­reliance on ratings and improve the quality of the rating process. He added credit rating agencies should face stricter rules, be more transparent about their ratings and be held accountable for their mistakes. Barnier said he also wanted to see "increased competition in this sector."

One of the arguments for encouraging new players to enter the rating field is that lack of competition means ­agencies are under little pressure to impress issuers or investors.

Louis Pestel, analyst at French fund selector Insti7, says he has no preference for any particular agency, simply stating "they all provide information".

More competition could encourage end investors to scrutinise which agency they choose, and thus push them to improve methods, transparency and business models.

As it stands, many investors are unhappy with the ­ratings provided by the big three. French fund selector Primonial Asset Management describes S&P downgrading France's AAA rating in January as a "non-event" that had no impact on markets.

Janus Capital says it was "unnerving" to consider Spain and Italy are now considered by some agencies to be less creditworthy than Korea and Chile, and roughly equal to South Africa and Malaysia. It adds: "In our opinion, the credit ratings agencies are now following, not guiding, market perceptions of European sovereign credit risk.

"Credit ratings agencies play an important role in fixed-income markets, and we do keep an eye on ratings. However, we base our investment decisions on our own bottom-up research, not on what others are saying."

Janus says ratings inefficiencies in the past have ­provided "great opportunities to add value to portfolios".

123
  • Tweet  
  • Facebook  
  • LinkedIn  
  • Send to  
  • Topics
  • France
  • Germany
  • Credit rating
  • Basel
  • Brazil
  • Chile
  • China
  • European Union (EU)
  • Janus Henderson Investors
  • Korea
  • Primonial
  • Standard & Poor's (S&P)
  • Solvency II
Back to Top

Most read

Global UHNWI population to grow by 27% over the next five years: Knight Frank
Global UHNWI population to grow by 27% over the next five years: Knight Frank
Amati Global Investors launches strategic metals fund
Amati Global Investors launches strategic metals fund
Aviva announces exit from Turkey
Aviva announces exit from Turkey
People moves: Phoenix Group, Franklin Templeton, TMF Group, AJ Bell, Arete, Just Group
People moves: Phoenix Group, Franklin Templeton, TMF Group, AJ Bell, Arete, Just Group
HSBC Malaysia appoints head of global banking
HSBC Malaysia appoints head of global banking
  • Contact Us
  • Marketing solutions
  • About Incisive Media
  • Terms and conditions
  • Policies
  • Careers
  • Twitter
  • LinkedIn
  • Newsletters

© Incisive Business Media (IP) Limited, Published by Incisive Business Media Limited, New London House, 172 Drury Lane, London WC2B 5QR, registered in England and Wales with company registration numbers 09177174 & 09178013

Digital publisher of the year
Digital publisher of the year 2010, 2013, 2016 & 2017
Loading