Rating agency: Coface filed for accreditation with the CESR
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Source: Red Edge Public Relations
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Date: Thursday, 29 July 2010
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Contact Person: Red Edge Public Relations
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Coface intends to become the first global European rating agency and to contribute to restore confidence in corporate ratings
Coface announced to file its accreditation request with the CESR (Committee of European Securities Regulators) as a rating agency specialised in corporates, for its 10 rating agencies in Europe. Coface offers an alternative to the traditional 3 rating agencies, as well as a response to the issues concerning independence and responsibility which currently place the rating agencies at the heart of the actual debate on ratings.
An accreditation to contribute towards restoring confidence in ratings
Coface filed its request for official accreditation with the centralising body, the CESR, which is the single point of entry for the registration and supervision of rating agencies in Europe. Once the application is approved, Coface will be the first global European rating agency. The accreditation will allow Coface's ratings to be recognised by investors as credit ratings, in terms of the European regulation.
A recognised expertise
Assessing a company's probability of default is the core of the credit insurance business that Coface has been doing for 60 years. In the year 2003, Coface has been producing internal ratings on all of its major exposures (over £á15 million on average). In 2009 it tested this internal rating as a public rating, in both France and in Hong Kong. And since the beginning of 2010 it is making the total of its 12,000 internal ratings worldwide become public ratings.
A global and decentralised rating agency
Coface ratings are produced in its 14 rating entities in Europe, Asia and the US (16 in 2010).Ten of them, located in the European Union, apply to the same procedure and production standards and numbers 85 analysts and 85 support functions (on approximately 150 analysts and 100 support functions worldwide). All ratings are strictly controlled.
An original model, limiting the risks of conflict of interest
Coface only rates companies on which it has a significant credit risk exposure: credit insurance is the first customer for Coface ratings. This assures a strict alignment of Coface, and of Coface ratings¡¦ users interests, since Coface cannot afford complacent ratings.
And Coface does not receive a payment from the rated company: rating is free of charge for the rated company. Coface ratings are public in 2 ways: the rated company can use Coface ratings in its communication; and interested financial institutions can access the ratings by taking a subscription
An alternative to an oligopolistic industry
Competition is the best way to improve the corporate ratings quality and reinforce confidence in ratings. Coface¡¦s model will enable medium sized companies to have access to an international rating, anywhere in the world, by facilitating their access to financing.
This filing by Coface should not be a surprise: the President of the European Central Bank, Jean-Claude Trichet, has just declared that ¡§it is probably the right time to cease having a worldwide oligopoly of three agencies¡¨. "Coface has been working on this project for nearly 10 years, declares Jérôme Cazes, CEO of Coface, and the expertise of credit insurers in ratings has been recently recognised by the Governor of Banque de France, Christian Noyer. One of the main objectives of the new European regulation for ratings was to increase competition, and facilitate the development of new players, with a different business model".
About Coface
Coface's mission is to facilitate global business-to-business trade by offering its 130,000 customers four business lines to fully or partly outsource trade relationship management and to finance and protect their receivables: credit insurance, factoring, ratings and business information and receivables management. Thanks to the worldwide local service delivered by 6,600 staff in 67 countries, over 45% of the world's 500 largest corporate groups are already customers of Coface.
Coface is a subsidiary of Natixis whose share capital (Tier 1) was 12.7 billion Euros end December 2009.
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