(The following statement was released by the rating agency)
Oct 11 - Fitch Ratings says in a new report that 30% of structured finance (SF) transactionsare now achieving higher Issuer Report Grades (IRG) then at the end of 2011. The agency hasupdated its Issuer Report Grades (IRG) scores for EMEA transactions.
Since rolling out its revised IRG scoring method, report providers have welcomedthe opportunity to upgrade the information published and have used Fitch'sframework as guidance to enhance their reports and better meet investorrequirements. However, further improvements are still required as only 7% oftransactions achieve the top score with only a further 6% receiving the secondhighest score.
Reporting standards have moved since the onset of the credit crisis, and it hasbecome clear that details of transaction features, such as the roles played bycounterparties, are critical to understanding the overall creditworthiness of SFnotes. Increased reporting on the actions of servicers and originators,particularly with respect to defaulted assets, has also grown in importance.
Reporting quality varies by country, with UK and German transactions showing thehighest quality of reporting, with Irish and Italian transactions achieving thelowest average IRGs. Transactions from the Netherlands, Portugal and Spain allsuffer from relatively poor quality reporting and only 3% of report providersfrom those jurisdictions achieve 4- or 5-star IRGs.
Sectors with a large proportion of transactions issued in recent years, likeconsumer ABS, show higher IRGs than those dominated by older transactions likeCMBS. In addition, recent transactions placed with investors show a higheraverage score than those retained for ECB collateral purposes.
Fitch IRGs are an objective, transparent system for grading the quality ofissuer reports. The grades are based on the amount of up-to-date asset,liability and counterparty performance information published on the transaction,as well as an allowance for its timeliness and user-convenience. IRGs are basedon the quality of performance reporting and are independent of the actual creditperformance of the transaction. The IRGs cover a scale of one to five, with oneindicating a poor quality report and five representing an outstanding source ofinformation for investors.
Fitch will continue to monitor the reports and revise the IRGs if there aresubstantial changes to the quality of reporting. The full report is available at.
Link to Fitch Ratings' Report: EMEA Issuer Report Grades Ã¢ÂÂ The Results