Credit Ratings and the COVID-19 crisis

Recording of the online debate on 4 June 2020.

Speakers:
- Stephen Hynes, ESMA
- Gwénaël Pover, ESMA
- Richard Portes, London Business School
- Colin Ellis (Moody’s)
- (moderator) Elena Carletti, Bocconi University and Florence School of Banking and Finance

More information: https://fbf.eui.eu/event/online-debate-credit-ratings-and-the-covid-19-crisis/

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In crisis times opinions expressed by Credit Rating Agencies (CRAs), and more specifically their downgrades, tend to provoke shockwaves across the financial system. Downgrades may indeed have a severe impact on sovereigns, banks or on market-based finance players, not least because they may trigger automatic responses both by public actors (e.g. exclusion from collateral frameworks) and by private actors (e.g. divestments or fire sales, exclusions from indexes or ETFs).
As is well-known, CRAs also tended to act late and to over-correct, thereby adding to pro-cyclicality. It can therefore be feared that the soundness of financial actors during the COVID-19 crisis will partly hinge on CRA opinions too. However, the influence of CRAs’ opinions on public actors’ credit worthiness assessment may be slowly vanishing, as the recent decision of the European Central Bank to accept junk bonds among eligible collaterals seems to imply.
Against this background this online seminar will take stock of the current regulation and supervision of Credit Rating Agencies in the European Union and will assess the impact of recent or future downgrades on issuers and markets. Lastly, it will explore lessons learned from the supervision of CRAs during the past euro crisis for the current COVID-19 crisis.
* The views and opinions expressed in this video are those of the speakers or authors in their personal capacity and do not necessarily reflect the official position of the Robert Schuman Centre or the European University Institute. *

Видео Credit Ratings and the COVID-19 crisis канала Florence School of Banking and Finance