The Report follows an investigation carried out by ESMA into the sovereign rating processes at the three CRAs, between February and October 2013. The investigation was prompted by concerns about potential conflicts of interests, the impact of sovereign ratings on other types of ratings, CRAs’ capacity to cope with the number of rating actions during a period of high volatility, the use of bulk rating actions, and issues around the confidentiality and timing of rating actions.

The investigation focused on the governance and organisation of sovereign rating activities, the adequacy and expertise of allocated human resources, the disclosure of rating information to the public, and ensuring its confidentiality before disclosure.

ESMA identified deficiencies and issues for improvement in the following areas:

• Independence and avoidance of conflicts of interests;
• Confidentiality of sovereign rating information;
• Timing of publication of rating actions; and
• Resources allocated to sovereign ratings.

ESMA has not determined whether any of the Report’s findings constitute a breach of the CRA Regulation, and may take action as appropriate in due course.

Steven Maijoor, ESMA Chair, said: