Circular Letter CVM/SIN No. 8/2013

CIRCULAR LETTER/CVM/SIN/No. 8/2013
Rio de Janeiro, July 17, 2013

To
Responsible Directors of
Credit Risk Rating Agencies

Subject: Activities of Credit Risk Rating Agencies in the disclosure of ratings for financial assets

Dear Sirs/Madams,

This Circular aims to clarify the understanding of the SIN regarding the application of the regulations established in CVM Instruction No. 521/12 for ratings of assets that do not require registration with the CVM, such as some credit assets, in particular CCBs and CCIs, among others.

In the interpretation of this technical area, we initially recall the provisions of Article 1 of CVM Instruction No. 521/2012, which considers credit risk classification as the activity of "opining on the credit quality of an issuer of participation or debt securities, of a structured operation, or any financial asset issued in the securities market."

We also recall that the provision applies "to credit risk classifications intended for publication, disclosure, or distribution to third parties, even if restricted to clients."

On the other hand, we recall the definition of securities provided in Article 2, IX, of Law No. 6,385/76, as "any other securities or collective investment contracts, which generate a right of participation, partnership, or remuneration, including resulting from the provision of services, whose earnings derive from the effort of the entrepreneur or third parties."

Combined with this legal definition, we also observe the Collegiate Decision regarding Process RJ2007/11953, in which CCBs were considered securities whenever "(a) they are the object of a public offering and (b) the responsibility of the financial institution for their fulfillment has been expressly excluded in the instrument."

Thus, we understand that all ratings of financial assets, even those of credit, that are characterized as securities, in accordance with current legislation and the aforementioned Collegiate Decision in CVM Process No. RJ2007/11953, are subject to CVM Instruction No. 521/2012, and for this reason, must be disclosed to comply with the provisions of Article 12, VI, of that Instruction.

Finally, we recall that public offerings, for the purposes of the aforementioned Collegiate Decision, are considered to include both those conducted based on CVM Instruction No. 400/03 and those conducted based on CVM Instruction No. 476/09.

Sincerely,

CLAUDIO GONÇALVES MAES
Acting Superintendent of Institutional Investor Relations