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Press, Journal Article
35
CORPORATE FINANCE LEANING MORE
TOWARDS CAPITAL MARKETS
A EUROPEAN RATING AGENCY SHOULD NOT BE ABSENT FROM THIS
By Torsten Hinrichs, Chief Executive Officer , Scope Ratings AG,
from Börsen-Zeitung, Supplemental Issue, Frankfurt am Main, Germany, February 4, 2016
For a long time now, investors and issuers have been
demanding a european rating alternative to the three
us agencies. why? because more and more projects,
infrastructure measures, as well as companies and
banks in europe are financed through the capital
markets. just recently, eu commissioner jonathan
hill presented his plans for a capital markets union,
thereby reinforcing the political will to further expand
and support corporate financing through the capital
markets. Against this backdrop, ratings will present a
key competency in the financing markets – even more
so in the future than in the past. A European voice
must not be absent from this concert.
Additionally, investors are still exposed to an American-
shaped monopoly of opinions, due to the oligopolistic
structure of the ratings market. The assessment
method applied by the US agencies, and ratings based
on these, barely differ, reflecting a US-centric view of
economic affairs and the default risk of issuers. At the
same time, issuers’ regional and cultural peculiarities
barely rate a mention.
Therefore the central question is: by how much can a
European rating alternative distinguish itself from the US
agencies in terms of analyses and ratings? One hope, often
expressed in the wish for a European rating agency, cannot
be maintained, however: the credit ratings assigned to
issuers will not be more forgiving or friendly than those from
the American agencies; agencies that assign courtesy ratings
will not be tolerated by the market. Instead, a European
rating agency has to establish an alternative perspective and
methodical approach which better reflects the realities of the
European capital markets, and do a better job at considering
peculiarities of European issuers.
A European rating agency can also crucially differ from the
Americans in its fundamental approach. For example, the
analytics of the American agencies are quite systematic and
became even more formalistic in the past. This tendency
was caused by the (valid) efforts to make ratings more
comprehensible to outsiders.