(The following statement was released by the rating agency)
Oct 11 - Fitch Ratings says in a new report that 30% of structured finance (SF) transactions are now achieving higher Issuer Report Grades (IRG) then at the end of 2011. The agency has updated its Issuer Report Grades (IRG) scores for EMEA transactions.
Since rolling out its revised IRG scoring method, report providers have welcomed the opportunity to upgrade the information published and have used Fitch's framework as guidance to enhance their reports and better meet investor requirements. However, further improvements are still required as only 7% of transactions achieve the top score with only a further 6% receiving the second highest score.
Reporting standards have moved since the onset of the credit crisis, and it has become clear that details of transaction features, such as the roles played by counterparties, are critical to understanding the overall creditworthiness of SF notes. 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 the highest quality of reporting, with Irish and Italian transactions achieving the lowest average IRGs. Transactions from the Netherlands, Portugal and Spain all suffer from relatively poor quality reporting and only 3% of report providers from those jurisdictions achieve 4- or 5-star IRGs.
Sectors with a large proportion of transactions issued in recent years, like consumer ABS, show higher IRGs than those dominated by older transactions like CMBS. In addition, recent transactions placed with investors show a higher average score than those retained for ECB collateral purposes.
Fitch IRGs are an objective, transparent system for grading the quality of issuer 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 based on the quality of performance reporting and are independent of the actual credit performance of the transaction. The IRGs cover a scale of one to five, with one indicating a poor quality report and five representing an outstanding source of information for investors.
Fitch will continue to monitor the reports and revise the IRGs if there are substantial 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