Brazil plans to reduce lending by its development bank by about 20 percent next year to shore up finances after posting the biggest budget deficit in almost four years, fueling speculation the nation’s credit rating may be cut. Local swap rates fell.
Michel Barnier, the European Union’s financial services commissioner, said credit ratings companies should have access to the same information. He was speaking at a press briefing in Brussels today. If a ratings agency uses information for one of its clients “the other agencies must have access to the same information,” he said.
Orange SA fell the most in more than a year after France’s former phone monopoly disclosed a tax expense topping 2 billion euros ($2.6 billion), prompting predictions of a credit-rating cut and overshadowing cost- cutting efforts to sustain profits.
Debt from Puerto Rico, with a credit rating lower than any U.S. state, is set for the worst month in almost five years. The losses signal a potential rebound as rising interest rates lure back investors.
The U.S. Securities and Exchange Commission has issued a report cautioning credit rating agencies about deceptive ratings conduct and the importance of sufficient internal controls over the policies, procedures, and methodologies the firms use to determine credit ratings.
In the run-up, or slow walk, to the fiscal cliff, credit rating agencies warned that a failure to reach an agreement to avert the automatic, year-end spending cuts and tax increases would put the nation's sovereign credit rating at risk. Standard & Poor's had already downgraded the U.S. long-term debt rating to AA+ from AAA on Aug. 5, 2011, during the debate over the debt-ceiling.
The Financial Stability Board will suggest rules to limit the influence of credit rating agencies on financial markets by the end of the year, Frankfurter Allgemeine Zeitung said, citing Bank of Canada Governor Mark Carney.