Rating agency

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Rating agencies ( English credit rating agency, CRA ) are private companies that commercially the creditworthiness ( credit rating ) of States and their subordinate authorities , businesses, financial instruments , financial products and claims rate. The process of credit rating and the result of the same is called a rating , the assigned credit rating (rating class) is abbreviated with a rating symbol or rating code .


The agencies summarize the result of their investigation ( rating ) in a letter combination ( rating code , also just rating ), which usually ranges from AAA or Aaa (best quality) to D ( insolvent ). The rating codes initially only reflect a ranking . In addition, the rating also takes into account the resistance to economic fluctuations , so that at least higher ratings indicate a permanently stable company.

Rating agencies that are formally recognized within the European Union to assess certain risks in the financial markets are known as External Credit Assessment Institutions (ECAI). Rating agencies are usually subject to government supervision. No rating agency can be established in Europe without the approval of the EU. The EU can revoke the license of agencies if they violate EU law . The agencies are supervised by the European Securities and Markets Authority (ESMA) and the authorities of the member states.

Requirements for ratings

Market participants in the money and capital markets ( investors , credit institutions and insurance companies ) and creditors have an interest in the creditworthiness of their debtors being examined by independent and expert third parties. For this purpose, the agencies must measure the probability of whether and to what extent the financial products will be repaid in full on the due date (plus interest).

The agencies' rating activities must be consistent with the principles of integrity , transparency , accountability , reliability and good corporate governance and must be independent , objective and of reasonable quality .


Even Henry Varnum Poor pursued these goals in the first rating tests at railway companies , published in 1868 in the Manual of the Railroads of the United States , the investors and potential investors informed about the railway companies. A systematic rating for the US railroad companies followed from 1909 by John Moody , the founder of the Moody’s agency . Moody's has had a rating for government bonds since March 1918 ("issue rating "; not for the states themselves), and in 1929 more than 120 government bonds were rated by the agencies. In April 1919, Moody's defined these ratings as the relative creditworthiness of a government with the components of ability ( creditworthiness ) and willingness to repay debt. The agencies failed to predict the sovereign debt crises in 1931 and subsequently overreacted with massive downgrades. In February 1936, the US banking supervisory authority ordered ( English Comptroller of the currency on) that banks only emissions and demands with a minimum rating ( english investment grade were allowed to take over), which triggered a clause requiring the acquisition of external ratings from.

The global economic growth in industrialized countries from 1958 onwards caused Standard & Poor’s, which emerged from a merger in 1941, to discontinue the ratings of government issues between 1968 and 1974. S & P has been part of the US media group McGraw-Hill Financial since 1966 , Fitch is majority owned by French Fimalac Holding SA (60%) and the remaining 40% by Hearst Corporation . The only listed agency is Moody's.

In July 1975, the United States Securities and Exchange Commission ruled that rating agencies should be the only ones allowed to comply with the legal requirement for companies to be rated before they were admitted to the US capital market . This had to be done by at least two approved rating agencies. Only Standard & Poor’s , Moody’s and Fitch ratings were expressly permitted . When country risks increased, especially in developing countries , the agencies began country ratings in 1982, and in 1986 Moody's started evaluating foreign currency risks.

In 1988, a German rating initiative was launched under the leadership of Deutsche Bank and the Börsenzeitung . She was aiming for a European rating agency. Therefore, the Projektgesellschaft für Europäische Rating mbH was founded in 1991 with the aim of founding a European agency. The sole shareholder was the publishing group Wertpapier-Mitteilungen Keppler, Lehmann GmbH & Co. Several banks were involved in this shareholder. However, the initiative was unsuccessful; the US rating system prevailed. According to this, the agencies are legally mandated to assess the creditworthiness of all market participants . The US financial regulator Security Exchange Commission (SEC) is supposed to monitor the agencies, but gives them a free hand in defining the criteria. The rated people finance the rating themselves. The agencies remain free of false evaluations because they can exercise the basic right of "free opinion" (1st Amendment to the US Constitution of 1791, part of the Bill of Rights ). This system, which was initially developed in the USA and for the USA, was initially imposed on developing countries by the International Monetary Fund (IMF) and globalized ( Basel II ) in the 90s by the Bank for International Settlements (BIS ) - including the EU has submitted to it.

In the 1990s, the German banking industry tried to set up its own rating agency together with Bertelsmann . In 1996 the Hessian Ministry of Economics and Deutsche Börse worked together, but there was no institutionalization. At times, a kind of creditworthiness watchdog was supposed to be installed at the European Central Bank, but the latter refused.

In August 2009, Creditreform Rating was the first German rating agency to be recognized by BaFin as a rating agency for regulatory risk weighting in accordance with the Solvency Regulation and Basel II . The recognition applies to the Other Receivables market segment (including corporate credit ratings and corporate bonds). As the first and currently only European rating agency, Euler Hermes Rating GmbH was recognized and registered by BaFin and the Committee of European Securities Regulators in November 2010 . This registration enables institutional investors - in accordance with Regulation (EC) No. 1060/2009 of the European Parliament and of the Council on rating agencies - to invest in papers that have been rated by EU-registered rating agencies. BaFin is currently revising the investment regulation for insurance companies in order to comply with the new EU regulation. As another specialized rating agency in Germany, GBB-Rating rates the banks that are part of the private deposit insurance fund.

Other national and international financial and banking supervisory authorities also recognized the importance of ratings and increasingly integrated them into the regulations on banking and financial supervision. On the force since January 2014 Kapitaladäquanzverordnung (CRR), the credit institutions in be EU Member States in the standardized approach (1 Art. 113 para. CRR) forced to take their borrowers by the agencies assigned credit ratings.

In addition to the three big agencies S&P, Moody's and Fitch, the European Central Bank also brings in the Canadian DBRS . These four rating agencies are those managed by BaFin for the “usability of unsolicited credit assessments”. No rating agency can be established in Europe without the approval of the EU; it can revoke the license of existing agencies in the event of violations of EU law. The houses are supervised by the European Securities and Markets Authority (ESMA) and the authorities of the member states.

The international approach is different. In China, for example, the Dagong Global Credit is recognized, which the United States, for example, does not classify as AAA, but only with A + in view of the national debt . Dagong ("Big Work") sees itself as an alternative to the Western rating system, which is dominated by the "Big Three" from the USA, Standard & Poor's, Moody's and Fitch. Dagong was founded in 1994 as a private company under Chinese law on the initiative of the Chinese central bank. According to the founder and current boss Guan Jiazhong, the Big Three finally discredited themselves through their misjudgments before the financial crisis. Their principle is wrong, because they are primarily not interested in the income situation of a country or company, but only in the ability to obtain credit. The guiding principle of Dagong, however, is that loans serve the real economy and ultimately the prosperity of the population.

In May 2010, the ECB accepted Greek government bonds as collateral regardless of their credit rating. In doing so, however, it made discounts on the nominal value. This now also applies to Portuguese bonds. On the other hand, should the agencies declare Greece insolvent, the ECB would no longer buy bonds.

In the USA, ten companies are listed as state-recognized statistical rating organizations, whose ratings may be used for capital market purposes (as of 2011). These are Standard & Poor's, Moody's, Fitch Ratings , Kroll Bond Rating Agency , AM Best Company , the Canadian DBRS , Japan Credit Rating Agency , the Japanese Rating and Investment Information (R&I), Egan-Jones Rating Company and Morningstar . Today there are around 150 rating agencies worldwide, but the three large US rating agencies form an oligopoly with around 95% market share .

European rating agency project

In view of the global financial crisis that began in 2007 , the Bertelsmann Foundation proposed in its feasibility study to found an international, independent and not-for-profit rating agency. As a result, a European rating agency based in Frankfurt am Main was to be founded in order to abolish the oligopoly of the rating agencies Fitch , Moody’s and Standard & Poor’s , which rated securitized securities unrealistically well and thus contributed to the crisis. This plan failed, however, because neither Roland Berger nor Markus Krall, as heads of a project company founded for this purpose, were able to attract enough private foundation capital.

In the first half of 2011, European commissioners and politicians called for the establishment of a European rating agency, which should dissolve the opinion oligopoly of the US rating agencies Moody’s , Standard & Poor’s and Fitch Ratings . Among other things, advocated German Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble , the creation of a European rating agency. [9] [10]

In this context, the company developed the model of a European rating agency and presented it to the EU Commission, the banking supervisory authorities and the governments of the EU countries in July 2011 . The biggest differentiator between the planned European rating agency and its US counterparts was the organizational form. Accordingly, the European variant should be a state-independent foundation . [11]

Roland Berger Strategy Consultants forecast 300 million euros for the establishment of the agency, which should be provided by a consortium of investors with 25 members. The start of the rating agency was initially planned for mid- 2012 with the development of country ratings . In the following years, bank and company ratings should also be developed. [12]

Unlike Moody's, Standard & Poor's and Fitch, the European agency shouldn't be geared towards making profits. It was planned to make all data relevant for a rating available on the Internet. To make partially opaque rating processes transparent. An economic advisory board should oversee the work of the new rating agency. [13]

In January 2012, the Roland Berger company announced that the European rating agency might be issuing its first own ratings from the beginning of 2013. [14] The rating agency was to be established as a not-for-profit, private foundation based in the Netherlands by the end of the first quarter of 2012. [15]

After the founding of the European rating agency threatened to fail in the spring, Roland Berger Strategy Consultants announced in April that the agency was about to be founded and that enough investors had been found. The founding boss of the European rating agency will be Markus Krall , who will resign from his position as Senior Partner at Roland Berger. [16] On April 29, 2013 it was announced that the plan had failed. [17]

Rating process

Course of the rating process

The rating process begins with an order from an issuer or borrower to an agency, the so-called mandate contract. In principle, however, an investor or lender can also place the order with the rating agency. The content of the contract is the instruction to the agency to check the creditworthiness of the debtor against the release of published information, but also internal company information that is not publicly accessible. Internal company information includes precise details or information about the ten largest customers, suppliers, etc., about financial plans and the most important competitors, exact cost and income structures and planning. An analysis of the quantitative and qualitative factors follows within the agency; this analysis can be complemented by interviews with the debtors' chief financial officers.

Then two analysts (junior and senior analyst) give a rating recommendation; The rating committee makes a final decision on this. Its decision is first presented to the client and published after its approval.

The rating committee also makes autonomous decisions about every rating update that takes place at least once a year, but then without consulting the debtor. Secret information is included in the rating, but not in the verbal explanations. It is an agency's corporate secret which factors it takes into account and how they are weighted. The underlying mathematical formulas are also not publicly available.

Updates are intended to ensure that the rating corresponds to the current creditworthiness. The agencies not mandated only evaluate the publicly available company information and also analyze it for the purpose of creating what is known as a secondary rating (unsolicited rating ) . The different degrees of information can therefore have a lower degree of reliability than the mandated ratings.

The agencies have developed different rating procedures for different types of debtors in order to do justice to the individual business characteristics of each debtor. Despite the information advantage of the mandated agency over the secondary agencies, the past has shown that the agencies usually only differ by one or at most two notches or rating levels for the same debtor. The different rating methods used by the agencies do not seem to have a substantial effect on the rating result over time.

A study by the University of Heidelberg on the evaluation of the creditworthiness of countries by rating agencies sees evidence of frequent changes to the rating proposal submitted when the final decision is made by the rating committee.

Dependencies and Conflicts of Interest

With regard to the possible dependencies and conflicts of interest of the rating agencies, a distinction is made between legal and economic aspects.

  • Legal aspects :

Since December 2004, the agencies follow writing set rules of conduct ( English Code of Conduct ) of the International Organization of Securities Commissions , after which the rating agencies their independence to preserve and conflicts of interest have to be avoided. According to No. 2.1 the agencies may not fail to carry out a rating measure due to feared effects. The determination of a rating may according to no. 2.3 can only be influenced by factors relevant to the rating. According to Section 2.4, the created credit rating must not be influenced by the existing or future business relationship with the customer.

Since September 2009, regulation EC No. 1060/2009 , which has been in force in all EU member states, has regulated the integrity , transparency , responsibility , good corporate governance and reliability of rating activities. According to Art. 6 Para. 1 of this regulation, a rating agency takes all necessary steps to ensure that the issuing of a rating is not influenced by existing or potential conflicts of interest or business relationships of the agency itself. According to Art. 8 Para. 1 of this Regulation, it must disclose which methods, models and basic assumptions it uses in its rating activities. Regulation (EU) 462/2013 of May 2013 brought some changes by also dealing with country ratings, prohibited cross-shareholdings within rating agencies or civil liability that can lead to compensation by the rating agency.

Agencies must be recognized and registered rating agencies ( External Credit Assessment Institution ) within the meaning of Art. 113 (1) Capital Adequacy Ordinance (CRR) so that their ratings are legally recognized by the banking supervisory authorities and credit institutions can use them. Finally, Article 135 (1) of the CRR stipulates that the CRR credit institutions may use the ratings of recognized rating agencies to determine their creditworthiness.

  • Economic aspects :

The rating agencies publish fee tables on the basis of which graduated fees are to be paid by the client . Users of the agencies ( credit institutes , insurance companies ) also pay fees. With regard to the client, the fees are based on the amount of the issue and / or the size of the company . The minimum fee is US $ 20,000, depending on the agency, but this is significantly exceeded by the volume of the issue and the intensity of the examination. The flat fees for banks and insurance companies are lower.

It is repeatedly objected that the interest in receiving a mandate and in future rating orders could limit the objectivity of their judgments. However, due to the limited number of agencies, their large customer bases and the relatively rigid structure of the rating fees, the dependency appears to be rather low. The three large agencies have reached a size in which the departure of a rated (assessed) customer is not a serious issue. The agencies' dependency on the fees of an individual client has steadily decreased, at the latest since it became a legal obligation for credit institutions with the credit risk standard approach to adopt agency ratings. The large number of rated issuers, borrowers, financial instruments or countries causes their share in the total turnover of an agency to decrease, so that there are no significant turnover dependencies. The suspicion of an economic dependency on the client to be assessed is therefore low. In addition, empirical studies have so far not been able to find any evidence of this. This topic is not specific to rating agencies, but also affects mandated tax consultants or auditors to the same extent.

Rating grades

Different scales are used for the ratings. The following table gives an overview of the scales of the leading agencies using recognized comparison tables:

Moody's S&P Fitch DBRS English
Aaa P-1 AAA A-1 + AAA F1 + AAA R-1 (high) Prime (Triple A) Debtors with the highest creditworthiness, risk of default also in the long term virtually negligible
Aa1 AA + AA + AAhigh R-1 (middle) High grade Safe investment, failure risk as good as negligible, but somewhat more difficult to assess in the long term
Aa3 AA- AA- AAlow
A1 A + A-1 A + F1 Ahigh R-1 (low) Upper medium grade Safe investment, provided no unforeseen events affect the overall economy or the industry
A2 A. A. A.
A3 P-2 A- A-2 A- F2 Alow R-2 (high)
Baa1 BBB + BBB + BBBhigh R-2 (middle) Lower medium grade Average investment. Problems are to be expected if the economy as a whole deteriorates
Baa2 P-3 BBB A-3 BBB F3 BBB R-2 (low)
Baa3 BBB- BBB- BBBlow R-3
Ba1 Not Prime BB + B. BB + B. BBhigh R-4 Non-investment grade
Speculative investment. If the situation worsens, failures are to be expected
Ba3 BB- BB- BBlow
B1 B + B + Bhigh R-5 Highly speculative Highly speculative investment. If the situation worsens, failures are likely
B2 B. B. B.
B3 B- B- Blow
Caa1 CCC + C. CCC C. CCC D. Substantial risks No failures are to be expected only if the development is favorable
Caa2 CCC CC CC Extremely speculative
Caa3 CCC- In default with little
prospect for recovery
Moody's: in arrears
Standard & Poor's: high probability of default or insolvency proceedings applied for, but not in arrears yet
Approx CC C. C.
C. SD / RD / D. / Selective / Restricted default Partial, limited or total payment default
D. D. In default

Problems of the rating process

On the basis of individual large scandal cases, it was precisely documented how the agencies came to incorrect assessments in their rating classifications. It was about the total imbalance of the agencies in connection with the spectacular cases Enron (1997), WorldCom (2001), Parmalat (2003) as well as the misjudgments in the state crises in Asia (1997) and Argentina (2001) or the largest municipal ones The insolvency of Orange County in California in December 1994. These are not isolated cases, as the widespread mispricing of securitized mortgage securities and banks in the run-up to the last financial crisis of 2007/8 as well as the sudden downgrading of the European crisis states Greece, Portugal, Ireland and Spain. It also became apparent that these deficiencies are not predominantly agency-specific, but that other credit institutions or other investors were partially affected by them.

Transparency in information gathering

Rating agencies must gain access to the debtor and his latest rating-relevant information that is consistent with corporate reality. The agencies, especially in critical cases, are confronted with the same problems of obtaining information as credit institutions and other creditors. This is due to Akerlof 's adverse selection theory , which can be applied analogously here , according to which debtors tend to withhold, play down, publish too late or not at all that information that results in an economic disadvantage (higher loan interest or even loan termination) could. In the Enron case, for example, the agencies insisted that their ratings accurately reflect creditworthiness based on the information available. “Information available” was the information available to the agencies, not the information withheld.

Conversely, it has also come into focus that rating agencies, in order to increase transparency, made their rating models publicly available; rating experts were also enticed away from interested investment banks. As a result, the latter were able to make the product to be tested look much better in terms of the test criteria than it actually was (see also “ Balance sheet cosmetics ”).

Vicious circle "trigger event"

In many cases, internal factors are the cause of a company crisis. However, the assessment of the company's creditworthiness by rating agencies can quickly lead to further problems, which are mutually dependent in the form of a vicious circle .

Issue terms and loan agreements regularly contain various types of adjustment and termination clauses that are linked to the ratings of an agency. Any deterioration in the rating (downgrading) can be a trigger event for contractually agreed clauses or ancillary agreements (financial covenants ) , namely a reason for termination for the creditor. In addition, the so-called cross-default clauses also lead to the termination of loan agreements that do not themselves contain a rating-related trigger . A rating agency can quickly worsen (or even create) a corporate crisis by downgrading its rating, should rating-related, automated loan cancellations occur.

Furthermore, any downgrading of the rating via automated interest rate increases (margin grids) can contribute to an increase in lending rates. This also triggers a vicious circle, because the increased borrowing costs ( ceteris paribus ) reduce the debtor's profits or increase his losses - which further decreases the company's creditworthiness. Institutional investors are prohibited from investing in companies below a certain rating level, so that funds and insurance companies are also subject to such rating requirements in their purchase and sale decisions.

Ultimately, creditors or potential business partners of the downgraded company become more cautious, invest less or even leave the company and with this behavior make further downgrades in the sense of a self-fulfilling prophecy likely. This vicious circle was - among other causes - decisive in the Enron bankruptcy. These triggers had triggered the repayment of loans in the amount of 690 million dollars.

Conflicts of Interest

The agencies are sometimes accused of maintaining close relationships with the (financial) board of directors of debtors ( issuers ), which can lead to excessive mutual influence or even expose them to the risk of being misled. In regular meetings with debtors, these are influenced by the agencies to determine which measures are to be taken or not to be taken in order to obtain or maintain a certain rating. Since debtors and not investors represent the agencies' greatest source of income, there is a risk of a conflict of interest here: Impending downgrades could lead to disputes or even a loss of the debtor paying fees by changing the agency. The risk of a conflict of interest is rated as lower when an agency has many clients. In the structured financial products market, however, the six largest clients have controlled half and the twelve largest four fifths of the rating market since 2002.

See: Principal-Agent Theory

Cases of fraud

With intentionally wrong information, in the worst case in the annual financial statements , the interested public is supposed to be simulated a better economic situation. However, the fraudulent efforts must be so plausible that analysts do not suspect anything for a long time and consider the information available to be correct and plausible. Enron and Parmalat were such cases of accounting fraud. The fraudulent manipulations, certified by renowned auditors, were initially not noticed by the auditors, the analysts of the agencies or the analyzing banks. The agencies also cheated themselves. As has been proven by investigations by the US Congress and by numerous publications, the Big Three have given favorability ratings, bullied and forced analysts to leave, and at the same time advised the issuing banks with the help of subsidiaries. In particular, they made it possible for investment banks, who all wanted to bring new financial products to the booming market quickly, to “rating hopping and shopping”: If one agency hesitated to give a top rating, the bank quickly switched to the next agency or threatened to do so. This was facilitated u. a. through the practice of “revolving door”: employees of banks and the state supervisory authority SEC switch to the rating agency and back.

Rating agencies as certifiers

Lenders such as banks or commercial investors, as active creditors, have to expect loan defaults if their own ratings are incorrect. This means that their ratings have a self-sufficient, independent status that ensures their existence. Rating agencies, on the other hand, create debtor ratings without granting the debtor credit. Your status is that of a certifier without your own risk. On the one hand, this ensures them part of their objectivity, but on the other hand, it reduces their personal responsibility for ratings.

Rating errors by the agencies therefore do not threaten their existence. The agencies therefore simply refer to their ratings as “opinions”, which do not represent any recommendations to buy, hold or sell. This has since been resolved by the constitution in the USA - triggered by the bankruptcy of Orange County. After that, a district court ruled that rating agencies do not provide financial advice, but that their ratings are subject to constitutionally protected freedom of expression. In Germany, the Berlin Court of Appeal dealt with the question of whether rating agencies are legally responsible for the notifications they publish. It took the view that the communications were covered by freedom of expression insofar as they were based on a neutral, knowledgeable analysis carried out in an effort to be objective. At banks, however, ratings represent a u. U. constitutes an existential basis for decision-making for the granting, holding and early repayment of loans.

Admission process

The Federal Financial Supervisory Authority recognizes the following rating agencies for risk weighting (for capital adequacy ), although they have not yet been approved for the performance of rating activities in accordance with the new EU regulation :

  • Creditreform Rating, a German rating agency, based in Neuss (Verband der Vereine Creditreform e.V.)
  • Dominion Bond Rating Service (DBRS), a rating agency based in Toronto
  • Fitch Ratings, majority owned by Fimalac, based in New York
  • Japan Credit Rating Agency Ltd., based in Tokyo
  • Scope Ratings , a European rating agency headquartered in Berlin
  • The McGraw-Hill Companies under the Standard & Poor’s Ratings Services brand , based in New York
  • Moody's Investors Service, based in New York


US rating agencies cannot be called upon to pay damages for misjudgments , as ratings are viewed by the US constitution as mere “opinions” (within the framework of legitimate freedom of expression ). Since the Enron crisis, there have been repeated criticism of rating agencies. In 2003 there was criticism of the rating agencies from the Economic and Monetary Committee of the European Parliament. The key points of the report he submitted on October 6, 2003, which was commissioned as a result of the Enron crisis in 2002, were conflicts of interest and the lack of transparency in the basis for decision-making, as well as allegations that the agencies were acting too procyclically, i.e. they only intensified ongoing developments .

In January 2006, BaFin accused the Scope rating agency of panic after it had given an open-ended US real estate fund a negative rating. In the context of the financial crisis from 2007 onwards , the criticism of the rating agencies increased sharply and triggered a political debate at the highest level in the USA and Europe. The agencies are accused with the award partly unrealistic good ratings, often even with the top rating AAA rated securitized securities , the market participants too have signaled to low risk and thereby given the financial markets a false incentive. The credibility of the rating agencies and the informative value of the ratings they give are also called into question in connection with the allegation of securities fraud against Goldman Sachs , since the securities in question were given the best rating. The role that ratings play in the Greek sovereign debt crisis and the euro crisis also ensures that the rating agencies collide with political interests. On the stock exchange, the loss of credibility is reflected in the bond prices or the risk premiums, which often differ greatly from the relevant ratings.

It is viewed critically that the rating agencies are paid by clients whose financial products they are supposed to rate at the same time, which represents a conflict of interest. The rating agencies are accused of being subject to this conflict of interest by promising or awarding ratings that are too good in order to secure orders or follow-up orders. The conflict of interest between agencies and the issuers as their clients would not arise if the investors , instead of the issuers, commissioned the ratings. However, if investors have to publish paid ratings in order to justify their customers' investment decisions, other investors can receive this information free of charge ( free rider problem ). That is why the rating agencies now receive their income almost exclusively from orders from issuers.

Economic experts criticize the lack of transparency in the rating process in particular. For reasons of trade secrecy, the rating agencies do not disclose the data and evaluations based on which they arrive at their assessment. The calculated ratings cannot be clearly understood, you just have to believe them. In the opinion of some economists, the data from annual reports and economic indicators are significantly better than the ratings of the rating agencies with regard to the hit rate in terms of payment default. Country ratings, for example for Iceland , also met with criticism. Iceland was on the verge of bankruptcy following the collapse of its banking sector in 2008. But just a few months earlier, Moody's had given it the top AAA rating. In 2006 there had been rumors of possible problems for the country's banks, which rating analysts described as exaggerated.

It was also criticized that the small number of globally relevant rating agencies give them oligopolistic power. The main criticism, however, is the evidence of the tight capital links between the rating agencies and the players who dominate the financial market today, the hedge funds and large asset managers. For example, the well-known US speculator Warren Buffett has long held varying stakes in Moody's through his holding company Berkshire Hathaway. The world's largest asset managers such as Capital Group, Blackrock, Vanguard, State Street and T. Rowe Price are the main shareholders of Standard & Poor's and Moody's, either simultaneously or with varying shares. Insider trading is pre-programmed through these interrelationships, if there is also the fact that Blackrock assesses the creditworthiness of states and at the same time advises on debt management. Because the three largest rating agencies (“ Big Three ”), 97 percent of which dominate the rating market , are so closely intertwined with Wall Street, they are unable to take an objective view from the outside. The then head of Standard & Poor's, Deven Sharma, therefore stated after the financial crisis of 2007/2008: “We were completely wrong, we rated the subprime securitisations too good. But hardly anyone foresaw the drastic slump in the US real estate market. "

A study by Heidelberg University comparing the work of nine rating agencies on the creditworthiness of countries revealed that the agencies did not apply the same criteria to all countries. The respective home country and countries that were similar in their characteristics to the home country received comparatively better grades than other countries.

Another group of researchers who examined Moody's ratings from 1980 to 2010 found that states and municipalities are rated much more strictly than companies and financial products. The research group examined all bonds that had received an A rating from Moody's with the frequency of their defaults. Not a single government bond, only 0.49% of municipal bonds, 1.8% of corporate bonds, 4.9% of financial bonds and even 27% of financial products (derivatives) failed, although all bonds had the same rating. The ratings given five years later for the same paper also differed widely: 3% of government bonds, 6% of municipal bonds, 17.8% of simple financial bonds, 27.4% of corporate bonds and 33.3% of bonds structured securities were devalued. Werner Rügemer criticizes "that states and municipalities were rated the most strictly and structured products the most generous". In addition, the rating agencies charge the lowest fees for government and municipal bonds and the highest fees for structured financial products, while the fees for corporate bonds are in the middle. "High-paying ratings are given a friendlier rating than low-paying ones," concludes Rügemer, as the financial products were far more in default than the government and local government bonds, even though they were all given the same rating.

In 2010, the three largest rating agencies, Standard and Poor's, Moody's, and Fitch, sold a total of 2.734 million ratings, employing just 3,598 rating analysts and rating supervisors. On average, an analyst produced 760 ratings in one year, which means roughly two ratings per day. Werner Rügemer criticizes the fact that the ratings cannot provide any qualitative information at all, as they are produced as if on an assembly line, considering that a structured financial product of a bank, a group or a state is up to 300 pages long.

Political Consequences

As a reaction to the assumed joint responsibility of the rating agencies for the financial crisis, the EU Rating Regulation (Regulation No. 1060/2009) came into force on September 16, 2009, which includes various measures regarding conflicts of interest, rating quality, transparency and internal management structure of rating companies provides. In particular, the government draft of the implementation law for this ordinance proposes that rating agencies should in future be subject to supervision by BaFin as the supervisory authority, which can impose fines in the event of a violation of the ordinance.

In early 2010, various politicians called for a European rating agency to counterbalance the American one. The German economy, Peter Bofinger , spoke out in May 2010 in view of the Greek financial crisis and the risk of spilling over to other countries in favor of the establishment of a “European, not-for-profit rating agency”. The three big agencies Standard Poor's, Moody's and Fitch have "failed massively in every crisis so far", but have not yet been held accountable. There is no real competition among the rating agencies, nor are they liable for their assessments.

Following the downgrade of Portuguese and Italian bonds, EU Justice Commissioner Viviane Reding called in July 2011 to either dismantle the three main agencies or encourage the creation of additional agencies.

On November 15, 2011, the EU Commission presented new proposals for stricter regulations for rating agencies. According to this, financial institutions should no longer rely exclusively on ratings for their investment activities, country ratings should be created more transparently and more frequently, and rating agencies should become more independent, exposed to greater competition and more liable for the ratings they create. The temporarily pursued idea of ​​introducing a legal basis through which the publication of ratings for European countries should be temporarily prohibited was not pursued any further. With Directive 2013/14 / EU , the EU member states are now obliged to implement suitable measures by December 21, 2014 at the latest to prevent excessive recourse to ratings without their own creditworthiness check of the issuer. The aim is to improve the quality of the investments made by institutions for occupational retirement provision (EBAV), undertakings for collective investment in securities (UCITS) and alternative investment funds (AIF) and better protect investors in such funds. In future, managers of EBAV, UCITS management and investment companies and AIFs may not rely exclusively and automatically on ratings when assessing the risks associated with investments made by EBAV, UCITS and AIFs, or use them as the sole parameter. This is a direct consequence of the financial crisis because "there has been an excessive reliance on investor ratings, including EBAV, UCITS and Alternative Investment Funds (AIF)," when investing in debt securities.

In November 2012, Italy brought market manipulation charges against seven managers from two rating agencies (S&P and Fitch) in an Italian court.


Rating agencies play an important role in the global financial , securities and banking markets as credit institutions, investors, borrowers, issuers and governments, among other things, use the ratings of these agencies to make informed investment and financial decisions. Rating agencies are of great importance for the functionality of the financial markets, because the European credit institutions are legally obliged to adopt the ratings of the agencies in the standardized approach. Significant decisions around the world depend on the ratings , because in the case of bad ratings, institutional investors or credit institutions are obliged to sell financial products, to increase the credit margins on loans or to cancel loans . Conversely, such poorly rated financial products may not be purchased or credit checks will be negative.

See also


  • Patrick Andrieu: Rating Agencies in Crisis - About the introduction of quality standards for ratings by the European Union. Peter Lang, Frankfurt 2010, ISBN 978-3-631-59902-0 .
  • Denise A. Bauer: An organizational model for regulating the rating agencies - an amount for regulated self-regulation on the capital market. Nomos Verlag, Baden-Baden 2009, ISBN 978-3-8329-4897-9 .
  • Uwe Blaurock : Responsibility of rating agencies - control through private or supervisory law? ZGR 2007, pp. 603–653.
  • Benjamin Cortez, Stephan Schön: Rating Agencies in the Spotlight of the Financial Market Crisis. Economics studies (WiSt) 2010, pp. 170–175.
  • Julius Forschner: The liability of the rating agencies . In: JSE. 1/2012, p. 5 ff.
  • Brigitte Haar: Sustainable rating quality through profit skimming? - On regulation and its implementation in the rating sector. Journal for Banking Law and Banking (ZBB) 2009, p. 177 ff.
  • Dirk Reidenbach: Equity Analysts and Rating Agencies - Who is Monitoring the Supervisors? Peter Lang, Frankfurt 2006, ISBN 3-631-55487-7 .
  • Werner Rügemer : Rating Agencies. Insights into the capital power of the present transcript Verlag, Bielefeld, 2012, ISBN 978-3-8376-1977-5 .
  • Ulrich G. Schroeter : Ratings - creditworthiness assessments by third parties in the system of financial market, corporate and contract law. A comparative law study , Mohr Siebeck, Tübingen 2014, ISBN 978-3-16-152043-3 .
  • Andreas Witte: Ban on credit ratings for government bonds? Some thoughts on a current discussion from the perspective of international law and fundamental rights. WM 2011, p. 2253 ff.
  • Highlights of economic policy - Monthly report of the BMWi December 2010: "Powerful advisors" (PDF; 3.9 MB)

Individual evidence

  1. a b c d BMWi : Schlaglichter der Wirtschaftsppolitik, Monthly Report December 2010, "Machtvolle Consultants", p. 10 f.
  2. ^ Standard & Poor's Corporate History , 1997, p. 4
  3. ^ Norbert Gaillard, A Century of Sovereign Ratings , 2011, p. 4
  4. ^ Norbert Gaillard, A Century of Sovereign Ratings , 2011, p. 106
  5. according to SEC rule 15c3-1 so-called Nationally Recognized Statistical Ratings Organizations (NRSRO).
  6. ^ Norbert Gaillard, A Century of Sovereign Ratings , 2011, p. 9
  7. Christopher Borchers: Supervisory functions in private hands - role and importance of rating agencies. Potsdam 2002, p. 9.
  8. Werner Rügemer, rating agencies. Insights into the power of capital today , Bielefeld 2012, pp. 27 ff.
  9. Christina Weymann Bernd Bretschneider: Archive_Singleview. April 6, 2018, accessed December 12, 2019 .
  10. Credit ratings. Why rating agencies are so powerful. In: Financial Times Mobile. July 9, 2011.
  11. ^ Werner Rügemer: Rating agencies. Insights into the capital power of the present. Bielefeld 2012, p. 176 ff.
  12. Credit ratings. Why rating agencies are so powerful. In: Financial Times Mobile. July 9, 2011.
  13. Robert Säverin, “Machtvolle Adviser”, in: Schlaglichter der Wirtschaftsppolitik , Monthly Report December 2010, p. 13
  14. ^ Jan Siebert, Rating Agencies on International Financial Markets , 2014, p. 19
  15. ^ Thomas Trares: Rating agencies: EU adopts stricter rules . Genios Verlag, Munich 2012
  16. Jan F. Wagner: "It was still too early for a revolution" . In: Bankmagazin , year 2013, issue 5, p. 32
  17. Sevgi Cengiz: The role of the rating agencies against the background of the emergence of the financial crisis . Diplomica Verlag, Hamburg 2013, ISBN 978-3-8428-3709-6 , p. 58 f.
  18. ^ Ulrich Horstmann: The secret power of the rating agencies. The playmakers of the world financial system . FinanzBook Verlag, Munich 2013, ISBN 978-3-89879-793-1 , p. 60
  19. Doron Kliger, Oded Sarig: The information value of Bond ratings. In: Journal of Finance. Vol. 55,6 (2000), p. 2882.
  20. a b Malte Buhse: The monopoly of the seekers. In: time online. January 30, 2014, accessed February 1, 2014 .
  21. ^ IOSCO, Code of Conduct , changed in May 2008
  22. Peter Hoffmann, Credit Assessment by Credit Rating , 1991, p. 105
  23. Christian Wappenschmidt, Rating Analysis by International Rating Agencies , 2009, p. 31 f. with further evidence
  24. Carol Ann Frost, Credit Rating Agencies in Capital Markets , March 2006, p. 479
  25. Matthias Sattler, Compatibility of final examination and advice , 2011, p. 108
  26. See e.g. Swiss Financial Market Authority , concordance tables , accessed on November 12, 2014.
  27. ^ Moody's, Rating Symbols & Definitions , accessed November 12, 2014
  28. ^ S&P Global Ratings Definitions. In: standardandpoors.com. September 18, 2019, accessed February 28, 2020 (American English).
  29. ^ Fitch Ratings, Definitions of Ratings and Other Forms of Opinion , accessed November 12, 2014.
  30. ^ Werner Rügemer: Rating agencies. Insights into the capital power of the present. Bielefeld 2012, p. 135 ff.
  31. ^ Edward Wyatt: Credit Agencies Waited Months to Voice Doubt About Enron. In: The New York Times. February 8, 2002.
  32. Gretchen Morgenson, Louise Story: As Rating Agencies Shared Data, Wall St. Seized Advantage . In: The New York Times . April 23, 2010. / Louise Story: Prosecutors Ask if 8 Banks Duped Rating Agencies. In: The New York Times. May 12, 2010.
  33. ^ Riva D. Atlas: Enron's Collapse: Credit Ratings; Enron Spurs Debt Agencies To Consider Some Changes. In: The New York Times. January 22, 2002.
  34. See BMWi Monthly Report 2010/12 International Monetary Fund: Global Financial Stability Report. October 2010, p. 12.
  35. Representing everyone: Jens Rosenbaum, University of Trier: The use of rating agencies for capital market regulation in the USA: causes and consequences. February 2004, p. 6 f. This theory is closely related to the theory of information asymmetry.
  36. ^ Werner Rügemer: Rating agencies. Insights into the capital power of the present. Bielefeld 2012, p. 103 ff.
  37. County of Orange vs. The McGraw-Hill Companies, d / b / a Standard & Poor's Ratings Services, United States District Court, Central District of California, Case No. SACV 96-0765 .
  38. KG, judgment of May 12, 2006–9 U 127 / 05- ( Memento of September 30, 2009 in the Internet Archive ).
  39. Der Tagesspiegel from June 30, 2016, focus on the core business: FERI Group sells rating agency ( memento from July 24, 2016 in the Internet Archive )
  40. Expert Council for the Assessment of Macroeconomic Development: Annual Report 2007/2008 (PDF), p. 160: “What constitutes the business model of agencies is the fact that they basically see themselves as financial journalists who only give“ opinions ”on companies, whereby they see themselves protected by the United States' constitutional right to freedom of expression. This assessment is particularly important for the question of liability for damages, since agencies - unlike auditors - cannot be held responsible for incorrect information. "
  41. Jens Rosenbaum: The political influence of rating agencies. Dissertation. Wiesbaden 2009, pp. 56-57.
  42. The Tagesspiegel of January 19, 2006, Fund industry threatens stricter regulation - Another institute closes open real estate funds
  43. ^ Even if Bailout Ends Contagion, Euroland Is Changed Forever. In: Wall Street Journal. May 3, 2010.
  44. "Officials said they want rules to eliminate conflicts of interest at credit rating agencies that gave top investment grades to the exotic and ultimately shaky financial instruments that have been a source of market tower. The core problem, they said, is that the agencies are paid by companies to help them structure financial instruments, which the agencies then grade. "Stephen Labaton: Obama Plans Fast Action to Tighten Financial Rules . In: The New York Times. January 24, 2009.
  45. Rolling the dice would not produce worse results. boerse.ARD.de, March 15, 2012, archived from the original on July 19, 2012 ; accessed on March 15, 2015 (interview with Thomas Straubhaar , Director of the Hamburg World Economic Institute (HWWI)).
  46. ^ Werner Rügemer: Rating agencies. Insights into the capital power of the present. Bielefeld 2012, p. 61 ff.
  47. Interview with Deven Sharma, Handelsblatt, July 6, 2010
  48. ^ Werner Rügemer: Rating agencies. Insights into the capital power of the present . Transcript Verlag, Bielefeld 2012, ISBN 978-3-8376-1977-5 . Here pp. 95–96.
  49. a b c Werner Rügemer: Rating agencies. Insights into the capital power of the present . Transcript Verlag, Bielefeld 2012, ISBN 978-3-8376-1977-5 . Here p. 96.
  50. http://www.sec.gov/news/studies/2011/2011_nrsro_section15e_examinations_summary_report.pdf . Retrieved September 7, 2014
  51. ^ Werner Rügemer: Rating agencies. Insights into the capital power of the present . Transcript Verlag, Bielefeld 2012, ISBN 978-3-8376-1977-5 . Here p. 115.
  52. Criticism of rating agencies is growing - call for an independent authority. Reuters, April 29, 2010.
  53. Wirtschaftsweiser calls for far-reaching EU reform. ( Memento of June 3, 2010 in the Internet Archive ) ddp report, May 7, 2010.
  54. EU Justice Commissioner wants to smash rating agencies . In: The time . July 11, 2011.
  55. EU Commission wants better quality ratings. European Commission, accessed November 17, 2011 .
  56. EU wants to ban country ratings. In: Financial Times Germany. October 20, 2011, p. 1.
  57. See: DIRECTIVE 2013/14 / EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of May 21, 2013 amending Directive 2003/41 / EC on the activities and supervision of institutions for occupational pension schemes, Directive 2009/65 / EC on coordination the laws, regulations and administrative provisions relating to certain undertakings for collective investment in transferable securities (UCITS) and Directive 2011/61 / EU on alternative investment fund managers with regard to excessive recourse to ratings, OJ L 145/1.
  58. Recital 2 in RL 2013/14 / EU.
  59. Market manipulation by rating agencies: Italy is suing rating agencies S&P and Fitch. on: focus.de , November 12, 2011.
  1. - ( Memento of November 24, 2010 in the Internet Archive ).
  2. - ( Memento from December 9, 2010 in the Internet Archive )

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