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21 October 2011

FN: Five reasons against 'banning' sovereign ratings


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欧州委員会は、域内の金融規制当局が支援の対象となっている加盟国の債務の格付けの発行を禁じることを認めることを前向きに検討している。


Market confidence in these countries could disappear

Investors seemed relatively unconcerned with the Spanish downgrade by Moody's on Tuesday as shown by its CDS price barely moving upon the news and the IBEX 35, the benchmark for Madrid's leading stocks, only falling by just over 1 per cent overnight. But should investors be made to take a blind bet, they may not be so willing.

Asset managers would have to reassess their portfolios

Ratings of bonds by a recognised agency are essential to many fund managers – so any move to restrict a ratings change could mean they will be forced to remove that bond from their portfolios.

Impact on banks

Investment banks that have to shore up their balance sheet in preparation for banking stress tests and Basel III regulations could be made to drop all non-rated debt – even if it was issued by a sovereign, as it may not count towards its asset buffer

Countries could find it impossible to borrow

Countries affected by the potential ratings freeze would have their credit history severely impacted – as anyone who has tried to get credit without a reference would know.

Legal wranglings

National financial regulators, politicians, trade unions and many other stakeholders in the affected countries would no doubt want to voice their thoughts over the decision and what, how and when it could be done.

Full article (FN subscription required)



© Financial News


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