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Coface applies to become ratings agency - 29/07/2010

Coface has filed an official request to become an international ratings agency with the Committee of European Securities Regulators (CESR).

The credit insurer told Credit Today in June that it planned to become an accredited ratings agency aimed specifically at corporates by the end of 2010, as part of a strategy designed to expand its business offering and take on Moody’s, Fitch and Standard and Poors, the three traditional ratings agencies.

Coface filed for official accreditation from the EU regulator on 13 July. Initially the firm plans to open ten rating agencies across Europe, which will allow it to assess and provide verdicts on the risk of individual businesses that will be recognised under the terms of European regulation.

Xavier Denecker, managing director of Coface UK and Ireland (pictured), said: "Coface's intention to be licensed as a credit rating agency for its scores on corporate firms is good news for British industries and banks which have risks on big companies in the UK and in nine other EU countries where over 40 per cent of British exports are concentrated. They will be able to access the probability of default calculated by Coface according to an EU compliant methodology."

All ratings agencies have to file with CESR before 7 September to obtain official European recognition. Coface has initially filed for accreditation in France, Germany, the UK, Italy, Spain, Portugal, Belgium, Holland, Poland and the Czech Republic, and will be informed of the success of each individual application within six months.

A spokesperson for Atradius, a rival of Coface, told Credit Today that the firm had no intentions of pursuing the same route.

The spokesperson said: "Everyone is looking for ways to shore up their business. For us it is going back to basics and really focussing on being as good as we can at credit insurance, whereas I think Coface has decided to spread the net more widely."