Regulatory Alerts2023-12-07
Final report on EU CLO credit ratings – risk of conflicts of interests relating to methodology changes
ESMA issued this final report following a thematic investigation into the three largest EU credit rating agencies to assess risks of conflicts of interest arising from changes to their collateralised loan obligation rating methodologies. The regulator found that while safeguards against fee-related conflicts exist, controls regarding commercial influence from market outreach were insufficient, allowing non-analytical feedback to potentially impact methodology development. Consequently, ESMA has directed the investigated agencies to implement necessary remediations to ensure that methodology changes are based on objective reasons and to strengthen safeguards against commercial influence.
Share