MFA submitted a letter to the European Securities and Markets Authority (ESMA) in response to Call for Evidence on restricted subscription and private credit ratings.
In response to the Call for Evidence, MFA highlights the following core points:
- Confidentiality is the principal differentiator. Private credit ratings are generally selected when issuers, originators, or lenders prefer targeted distribution and confidentiality over broad marketing and public dissemination.
- Private ratings complement, rather than substitute for, internal analysis. Market participants typically treat private credit ratings as an additional input to underwriting, credit risk assessment, and governance, consistent with longstanding supervisory expectations to avoid mechanistic reliance on ratings.
- Governance and methodological rigour are comparable to those for public ratings. Where established, regulated credit rating agencies produce private ratings, the same core methodologies, controls, and surveillance practices can apply; what changes is how the ratings are distributed.
- Regulatory and supervisory transparency can be achieved without public dissemination. Experience in other contexts demonstrates that supervisory access to rating rationales and supporting analysis can coexist with confidentiality-based distribution models. The CRA Regulation and the 2022 ESMA Guidelines on the Scope of the CRA Regulation already establish a confidentiality-based framework; targeted clarifications to align that framework with ordinary institutional governance practices would enhance, rather than dilute, supervisory oversight.
